Diesel Car Sales Set to Overtake Petrol in Europe
30 January 2006 - Sales of new diesel cars in Europe continue to rise as consumers switch from less expensive petrol cars in search of fuel cost savings. The latest quarterly pricing survey by PricewaterhouseCoopers and eurocarprice.com shows that diesels accounted for 49% of the total European car market at the end of 2005. Diesel is now set to overtake petrol as the primary fuel for new passenger vehicles in Europe during 2006.
Prices for diesel cars continued to rise more quickly (by 3.5% a year) compared with those for petrol cars (3.2%) in the final quarter of 2005, although the overall rate of price increases slowed as sales weakened. New car sales fell in 13 out of the 19 countries covered by the PricewaterhouseCoopers survey. Overall, average prices at the end of 2005 were 3.4% higher than a year ago (in Q3 the average annual rise was 4.4%), while the total market was down by 0.6%.
Charles Seguin, Retailer Capabilities Division leader, PricewaterhouseCoopers, said:
“Although diesel car sales will undoubtedly outstrip those of petrol in the coming year, the debate continues on the ultimate level of penetration they will achieve. They could potentially achieve 55-60% of the total market but the extra costs of making diesels to meet tougher emissions requirements means buyers will still have to pay a premium over petrol versions. Fuel prices will be another factor. Demand for diesel models tends to be higher in markets where there is the largest price difference between petrol and diesel. Varying levels of diesel fuel taxation between countries will always be a constraint.”
According to the PricewaterhouseCoopers European New Car Price Index – a unique volume-weighted measure of relative new car prices - the most expensive car market in Europe is Denmark where new car prices are 91% higher than the eurozone average. The least expensive is Switzerland, where new car prices in the last quarter of 2005 were 8% below the eurozone average.
Local market summary - Weaker Koruna raises car prices relative to eurozone
New car prices in the Czech Republic fell for much of 2005 but rose slightly in the final quarter. The annual rate of increase (0.3%) was well below the European average, though, and the only segment to show a significant increase was Compact Executive, where prices rose by 1.5%.
Currency movements have raised relative new car prices in the Czech Republic. A year ago, the average price of a new car was 8% lower than the average price in the euro zone: it is now 1% higher partly due to the Czech Koruna weakening against the euro.
The Czech Republic market has continued to decline. Sales were 4.2% lower than the corresponding period in 2004. Contrary to trends elsewhere in Europe, sales and price movements were stronger for petrol models than for diesels. Petrol model prices were 0.7% higher than the same period in 2004, while sales of petrol models fell more slowly (-4%) than those of diesel models, which dropped 10% over the year. Diesels accounted for 28% of the new car market.
Other markets overview
Market performances across Europe as a whole remained varied. In the other big five markets, sales volumes improved slightly in Germany, Spain and France, where price increases were below the European average. For the second quarter in succession, Italy recorded the largest increase in new car prices of any European market but sales continued to decline. New car prices in the UK rose slightly faster than the European average but the total market dipped more than 4% below the previous year.
In Scandinavia, the recent growth in sales was reversed. While Denmark again saw the largest market growth in Europe, sales fell in Norway, Sweden and Finland. Retail prices in Denmark, Finland and Norway are well above the European average. Price increases in Denmark are now very low.
In Eastern Europe sales continue to be poor, particularly in Poland where the market is still down over 30% year on year. Poland is also the only market where average prices are dropping. Price increases in Czech Republic and Hungary were lower than 1% a year.
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Notes to the editor:
- The European New Car Price Index provides comprehensive analysis of movements in retail car prices and sales volume in 19 European car markets. The index compares average car prices in each market with the average price in the euro currency area (index 100). It also analyses 400 models in each market by fuel type, segment and body style to track trends in price and volume movements, using data supplied by ROADTODATA and Polk Automotive.
- PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 130,000 people in 148 countries work collaboratively using Connected Thinking to develop fresh perspectives and practical advice.
“PricewaterhouseCoopers” refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.
