What Future Lies Ahead for Diesel-Powered Cars?

March 30th, 2021

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It’s no secret that a growing number of countries around the world are looking to promote the uptake of ‘green’ vehicles. What with concerns around the environmental and health implications, many places have even set out plans to ban production of new petrol and diesel-powered cars from the end of this decade. And while Euro6 diesel emissions are considerably ahead of where they were a decade ago, now significantly reduced, that hasn’t dampened the calls for change in the broader community.

Faced with mounting pressure associated with corporate social responsibility, as well as regulatory change, more and more car manufacturers are committing to cleaner fuel technologies.

But what does that mean for the beloved diesel engine? After all, many of the commercial vehicles of today rely on diesel, and locally, Australia’s obsession with SUVs and utes has also ensured that it remains particularly relevant in the new car market. Does significant change lie ahead?

How popular are diesel vehicles in Australia?

It’s easy to say that the wheels were first put in motion following the ‘Dieselgate’ controversy with Volkswagen and a number of other car brands, where diesel emissions cheating devices were masking the true extent of their emissions. Spurring on a stricter suite of regulations, many auto-makers felt the burden of these changes would constrain margins and ultimately, that money would be better deployed towards more sustainable solutions for the long-term.

The impact of these changes, particularly in the European market, should not be dismissed by new car buyers on the other side of the world here in Australia. After all, we are a car importer, and Australia often receives Euro-designed vehicles.

However, as alluded to above, Australia’s new car buyers have shown little sign of a diminished appetite for diesel vehicles, with sales still strong. During 2020, Australians purchased 290,659 diesel cars. Although this was 12.5% lower than the 332,219 bought in 2019, when you take into consideration the broader slowdown in the market due to COVID-19, where overall sales fell 13.5%, the results were effectively in line with one another. Meanwhile, of the existing vehicle fleet on our roads, one in six cars are powered by diesel, or a total of 2.6 million cars.

What can we expect here in Australia?

It’s quite clear that the preference of local car buyers is markedly different to that of new car buyers in other regions, particularly Europe and Asia, where our love of 4WDs and utes cannot be matched.

Diesel, despite its drawbacks, is still embraced on account of the fuel economy and pulling power that is needed amid the sprawling nature of our cities, as well as our love of the great outdoors. It’s also unlikely that until such time that alternative fuel technologies like hydrogen and electricity become mainstream, and are even tailored towards our local taste for SUVs and utes, our own ‘bubble’ may continue to remain popular. The recent decision by various state governments to tax road usage among electric vehicles won’t help incentivise buyers to make the switch either.

Nonetheless, the key takeaway is that it is unlikely to expect local regulatory changes any time soon. What does that mean for us by the end of this decade when our peers have moved on? For now, we’ll have to wait and see.