Diesel demand still high despite ULEZ expansion

Demand for diesel vehicles is still increasing despite the expansion of the ULEZ in Greater London.

Drivers of non-compliant car will have to pay £12.50 to enter the area between the North and South Circular Roads, but data from Auto Trader suggests that has not put customers off buying older diesel models.

Ian Plummer, commercial director of Auto Trader, said: “You might expect there to be a big dip in demand levels and the price of cars that are not compliant with the new ULEZ zone, but that’s not the case. The used car market is so hot that even diesel cars over five years old are continuing to increase in price.

“We’re seeing this not only nationally but also in Greater London. The average price of a used car was £19,018 last week, up almost 24% year on year. That’s 76 weeks of consecutive price growth dating all the way back to when we exited the first lockdown last spring. The average five-year-old diesel increased in price from £13,513 to £ 18,293 in the last 12 months.”

He continued: “Penalising people for driving dirty vehicles is one thing, but incentivising them to drive cleaner cars is probably going to be more productive in the long term. The £620m investment in grants for electric vehicles and street charging points that has just been announced is welcome, but ministers should consider how that investment is targeted.

“Our data shows that interest in electric vehicles is coming almost exclusively from wealthier postcodes. The comparatively high up-front cost of EVs is proving to be a massive barrier for people on average or below average incomes. The government and industry simply has to grasp this nettle if it is to supercharge mass adoption.

“Ideally, that would mean removing VAT from purchases of new and used EVs. And it could also mean introducing some kind of means testing. Incentives are needed to bridge the gap between traditionally fuelled cars and EVs for those who simply cannot afford the ‘green premium’. The government highlighted the potential social injustice in EVs due to price issues, which makes it all the more frustrating that it’s failing to address it, choosing to prioritise targets over genuine substance.”