It was announced in late 2016 that Paris, Madrid, Athens and Mexico City are to ban diesel vehicles in 2025.  There seems little doubt that other major cities such as London and others in the UK as well as around the world will follow suit as the evidence is mounting that particles from diesel engines are causing a health epidemic.

According to Doctors Against Diesel, a lobbying group formed in December 2016, “nearly 40 per cent of all NOx emissions and PM10 pollution within London comes from diesel vehicles. There is now overwhelming evidence that both long-term and short-term exposure to small particles and gases from fossil-fuel derived air pollution have major adverse consequences on health. The fact that this is an invisible and odourless killer – unlike the great smogs of the 1950s – has meant that we have been sleepwalking into a health crisis that has already claimed thousands of lives.”

Of course, there’s no such thing as a non-polluting vehicle.  Pollution is emitted and energy used in the manufacture of all types of vehicles and even electric cars and vans are charged via the national grid which is fired by fossil fuels.  The difference though is that this pollution can be created away from people’s lungs, reducing the damage to health.  Diesel, and petrol to a lesser extent, produce poison as and where they drive and that’s the reason that time is running out for diesel in particular,

What this means for car and van owners is that vehicles on the road today could be affected by the ban in 8 years’ time as the lifecycle of cars and vans tends to be 10+ years.  Although they will be be able to be driven, a ban from cities could mean there are far more diesels on the road than there is demand for as most people want to be able to enter a city occasionally even if they don’t live in one.  This could render diesel powered motors worthless by then or very close to it.

The technological progress in electric and hybrid vehicles will also have a massive impact as improvements in range, charging times and charging points plus reductions in manufacturing costs which will soon make them cheaper than their internal combustion engined counterparts.  New alternate fuelled vehicles could become a lower cost option than used diesel or petrol.  Again this could massively reduce the value of traditional, used cars.

So what’s the answer if your driving profile right now suits diesel more than any other power source?  Buying is risky as the bottom could fall out of the used market.  Personal Contract Purchase, with the lure of potential equity at the end of the term, which often doesn’t materialise now, seems pointless too.  The answer may well be Contract Hire, whether Business or Personal, as residual values are someone else’s concern and the leasee simply pays a fixed monthly payment which is agreed at the outset.

As values of diesel powered vehicles start to drop or are predicted to drop for the aforementioned reasons, leasing rates may increase for these autos to reflect that.  Although this will not be good news for those that fill up at the black pump, it will at least be in black and white from the outset and there will be no risk of a nasty surprise at the end when it comes to value as the vehicle is simply handed back not sold on.  In contrast, those that buy their oil burners run the risk of finding there’s no market for their cast off within a few short years meaning that outright purchase may now no longer be a wise choice.

If you’d like to know more about how vehicle leasing works and how it could work for you, please get in touch.  Also, please connect with me on LinkedIn.  If you think others would be interested in this article, please share it.

Matt Spivey

Vehicle Leasing Neva Consultants
Left the corporate world in 2013 after ten years at Vodafone and now specialising in car and van leasing with Neva Consultants.Serial networker and member of BNI Wakefield Wealthbuilders, 4Networking and The TradesHub Academy South Yorkshire.

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