Rising demand for Alternative Fuels

BCA has issued a report examining the relative price performance of petrol, diesel and alternative powered cars in view of the prevalent economic conditions – particularly rising fuel prices – seen in 2008.

BCA analysed data on volume product from the fleet & lease sector and found there is an increasing demand for alternative fuelled and hybrid cars, although volumes remain small.

The price differential between diesel and petrol has remained fairly constant throughout 2008, with diesels selling on average for around £1,000 more. With fewer numbers of LPG/hybrid cars reaching auction, there is less of an obvious pattern with this fuel type, and the price is subject to more peaks and troughs.

However, looking at the price performance of the fuel types versus CAP Clean suggests there is growing demand for alternative power, despite these vehicles generally being older and higher mileage at the time of sale.

Values for LPG have consistently outperformed guide prices – often by a considerable margin – with the exception of April, where values just dipped below the 100% mark. The June figure was exceptional, averaging over 115% of CAP Clean figures. The relative scarcity, linked to an obvious – and potentially rising – demand is keeping values for alternatively fuelled cars much higher than the market norm.

In contrast, CAP figures for used diesel and petrol have declined steadily during 2008. In June diesel values at 92% were approximately 3.5 points down on January’s figures, while petrol values were three points lower in June at 92%.

Of the two dominant fuel types, however, used diesel has consistently outperformed used petrol in terms of performance against CAP, by around two points. The exception to this was in February, when petrol values outperformed diesel against CAP. It is tempting to think that this may have been stimulated by the widely reported news in January that crude oil had reached $100 a barrel for the first time and has continued to climb ever since.

BCA Communications Director Tony Gannon commented “There is a groundswell of interest in alternative fuelled vehicles and this is reflected in the strong performance being recorded against guide values in a market that is otherwise seeing values in decline.”

“There can be little doubt this is being driven by the credit crunch and rising fuel prices which are persuading more motorists to try LPG or hybrid electric, perhaps for the first time.”