European Diesel ownerships concerns mounting

The management of German car brands and the German government officials reached a compromise deal on the ban of diesel vehicles in Germany earlier this month to lower pollution. They agreed on software updates instead of more costly hardware fixes that are sought by environmental groups. Volkswagen Group, Daimler and BMW agreed to upgrade 5 million newer diesel cars and offer trade-in incentives on older models but the deal hasn’t removed concerns about pollution from the technology.

Citing government tests, German Environment Minister Barbara Hendricks told reporters on Wednesday that the planned software upgrades are “insufficient” for many cities to meet the legal limit for smog-inducing nitrogen oxides in the air.

Reflecting the pressure on demand, some 29% of diesel drivers in Germany said they would try and sell their cars as soon as possible because of concerns about falling values as cities mull driving bans, according to a survey by Deutsche Automobil Treuhand (DAT) market-research firm.

Pressure on used car prices, particularly such relatively young vehicles, is expected to further intensify as a result of the automakers’ trade-in bonuses for outdated diesel vehicles, the DAT said. Volkswagen is offering as much as 10,000 euros on cars with Euro-1 to 4 emissions standards. The bonus is paid only when customers exchange their old diesels for new cars, making “young” used ones less attractive.

As many as 20% of drivers, or 1.3 million car owners, could take up the manufacturers’ offers, according to consulting firm Oliver Wyman.

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