The industry faces a range of outcomes from city-led bans on older diesels, however in almost all scenarios automakers will be hurt. Consumers in Germany are turning away from diesels at an accelerated rate. The share of cars sold with the powertrain in January was 33%, down from 45% during the same month in 2017. With a few exceptions, diesel’s share is falling in countries across Europe. The future of diesel looks very bleak.
The worst-case scenario is that Germany’s diesel share will sink to 28% by 2018. For Europe overall, it expects a slower decline, forecasting the share will drop to 28% by 2025. In the UK, Europe’s second-largest car market after Germany, the diesel share for passenger cars stood at 35% in February, down from 45% during the same month a year earlier. That figure is expected to be 15% by 2025.
Last year, European demand for diesels slipped 7.9% to 6.77 million vehicles, resulting in a 43.8% share. That’s down from a peak of 54.9% in 2011, according to figures from market researcher JATO Dynamics. Sales will fall further, analysts believe.
Audi Executive Vice President Technical Development Horst Glaser came to a meeting with journalists at the company’s annual results conference in March armed with charts showing air pollution in Germany’s cities was improving. “Air quality is getting better and better, but the discussion is getting worse and worse,” Glaser said.
There is huge frustration right now at automakers such as Audi’s parent, Volkswagen Group, that their costly upgrades to ensure new diesel cars comply with tougher European emissions regulations are doing nothing to alter consumer belief that diesel is dirty and will soon be legislated out of existence.
The latest blow to the fuel’s reputation was the Feb. 28 ruling by Germany’s highest federal administrative court that cities could ban diesel cars to help reduce pollution. “The industry has a huge problem,” Bernstein Research analyst Max Warburton said in a note. “The range of outcomes from city bans is wide, but in almost all scenarios automakers will be hurt.”