Cars with diesel engines were once the most highly sought after of all engine types. In fact, diesels have historically commanded a premium over identically specified petrol vehicles, even in the used market.
But prices have slumped since punitive reforms to the Vehicle Excise Duty (VED) came into force in April 2017 and further reforms were announced that are set to be enacted in April 2018.
Emergent technologies such as electric vehicles (EVs) and petrol/electric hydrids are gaining a foothold in the UK car market. These new technologies are generally considered to be better for the environment, but what’s best for your wallet? Read on to find out.
The rise and demise of diesel
Way back in 2001, then chancellor Gordon Brown introduced revised tax rates for all newly registered cars. Rather than being based on engine size as before, the taxation bands were based upon the amount of carbon dioxide a vehicle emitted. This move was prompted by the EU’s imperative to meet the requirements agreed in the 1997 Kyoto Protocol.
Technological advancements at the time meant that diesel cars could be built to emit less carbon dioxide than their petrol counterparts. As a result of this, diesel vehicles often fell into the vastly preferential road tax emission bands at the lower end of the scale,
Spotting a rare opportunity to slash the cost of motoring, British drivers switched to diesel cars in droves. During the ’00s the number of diesel cars on Britain’s roads more than doubled from 3.45 million to 8.1 million.
But all good things must come to an end sooner or later. Even before Brown’s road tax reforms in 2001, scientists knew that whilst diesel engines burn fuel more efficiently and thus emit less CO2, diesel cars also emit higher levels of nitrogen oxides.
Some nitrogen oxides (NOs) are greenhouse gases and others are immediately harmful to human health. Petrol cars can mitigate NO emissions more effectively by using catalytic converters. The rapid spike in popularity of diesels during the early 21st Century led to dangerous levels of NO build up in our larger cities. This is is why we now find ourselves on a diesel witch hunt.
Time to put the brakes on
The first tax hike for new cars came into effect on 1st April 2017. This saw some diesel owners that previously paid no road tax at all on their old car facing the prospect of paying a ‘standard’ £140 a year (after their first year of ownership) should they choose to upgrade to a new diesel within the same emissions band.
The silver lining is that the first year of road tax is still based upon emissions. This means that for the most environmentally friendly cars the first year’s tax will be much lower. However, this cost is paid by the manufacturer and most likely passed on through the ‘on-the-road’ cost of the car, so this is unlikely to make much difference to consumers.
In April 2018, all diesel cars registered on or after 1st April 2017 will be subject to further increases in VED. This time, the change is simpler, with the charge for each emissions class being moved up a band. This means that any car that was registered on or after 1st April 2017 that isn’t ’emission free’ will attract a tax charge of at least £130 a year once the car is a year old.
In summary, combined with rising diesel fuel costs these developments make buying any new diesel car far less appealing than it was a few years ago.
Petrol is back in demand
The popularity of diesels is now plummeting. This is due to a combination of rising running costs combined with plans to levy surcharges or even enact outright bans on diesel cars in some city centres. Owners of diesel cars are now finding it harder to sell their vehicles as list prices fall through the floor.
As a result, the cost of petrol vehicles has begun to go up as demand for these ‘cleaner’ cars has risen. Buyers are increasingly likely to find that prices of second hand petrol cars are more than they expected. What’s more, as the price of petrol itself continues to creep up (albeit at a slower rate than diesel), drivers will yet again find running costs increasing in the coming months.
The mass adoption of electric vehicles (EVs) has long been held back by issues with performance, range, and cost. Even modern EVs on a full charge will struggle to cover a fraction of the miles offered by a traditional vehicle with a full tank.
Nothing short of a vehicle from a premium range will be suitable for longer road trips without regular charging stopovers. This wouldn’t be such a problem if there were more charging points. This is especially true in a county like Norfolk where finding even a traditional petrol station that’s still open can be a challenge at times.
The good news is that research cited by The Guardian claims that EVs are now the most cost-effective vehicle in terms of total cost of ownership. For the time being, generous government subsidies are underpinning this figure by substantially reducing the initial purchase price. And because EVs are zero emission at the point of use, they are also exempt from road tax.
The rising cost of running traditional vehicles will no doubt encourage the uptake of EVs, bringing down the cost of purchase and ownership further, even once the subsidies are removed.
Zipping around the city
Where EVs really excel is in city centres – the very place where diesels are now so unwelcome. If your journeys are typically less than 50 miles you can silently zip about town on a full charge or less for a fraction of the cost of a traditional vehicle.
In spite of notable black spots in rural areas, Britain already has one of the most extensive network of charging points in Europe. You can bet this is set to continue to grow substantially as people abandon combustion engines in search of cheaper motoring.
So, EVs are now cheap and increasingly practical. But unless you can afford to fork out for a new or nearly new car, you’ll still have to carry on burning fossil fuels for now.
Hybrid – the best of both worlds?
Perhaps you love the idea of an electric car but live in a rural area where there are no charging points? Or maybe you can’t park close enough to your house to charge your car overnight? In these cases, a hybrid car could be the way to go.
The biggest benefit of hybrids is that you get two engines in one car. The drawback… is that you get two engines in one car. You pay twice for the engines and then your car has to lug those two engines around (with fuel too, don’t forget). One of these engines will always be redundant at any given point in time.
Whilst driving stop-start around the city, your electric engine runs the show. If the battery runs flat, or when you pick up enough speed your petrol engine kicks in. No plugging in overnight, or forgetting to charge, or running flat without a charging point to be seen.
At first glance, a hybrid will give you both the environmental kudos of electric combined with the performance and range of a petrol engine. So long as you remember to refuel, you’re golden.
But hybrids don’t come cheap – you’re paying for two engines, remember? And you still have to pay for fuel, which is already eye-wateringly expensive and is set to carry on going up.
Plus, the government isn’t interested in giving you a tax break any longer – hybrids still pollute when running on petrol and that’s all the government cares about. The standard rate of vehicle tax will be set at £130 from next month for hybrids, a mere £10 annual saving over and above a standard petrol car.
Electric vehicles are generally considered to be the best for the environment. But older models still aren’t that common. Unless you can afford a new or nearly new car, an EV might not be a realistic option right now. Charging points might also be non-existent where you live at the moment.
For the time-being you might have to plump for petrol until the EV market matures and preloved vehicles (and charging points) are easier to come by.
Even if you can’t save money by going electric right now, we can still help you save money on the cost of driving!
Once you successfully complete our Pass Plus course you will be able to save on the cost of your insurance. You’ll also be a safer and more confident driver to boot!