Market insight: Diesel fuel sales tipped to power on

DIESEL passenger car sales appear to be on a bit of a rollercoaster ride at the moment, but that doesn’t worry the companies that supply them with the fuel they need.

Sales of oil-burning passenger cars have climbed steadily to peak at just more than 22,000 in 2010, but since then they have fallen to about 18,500 units.

However, the Australian arms of fuel supply behemoths Shell and rival Caltex say they are preparing for years of growth in the market, with projections tipping diesel fuel sales to rise by about 4 per cent a year.

Volkswagen thinks it may have part of the answer. The German premium brand pioneered the popularity of diesel passenger cars, pricing its oil-burning Passat mid-size sedan and wagon as the entry-level models in the range in 2006 - a stark contrast in a market where diesels have traditionally attracted a hefty premium over their petrol versions.

According to VW’s general manager of communications, Karl Gehling, sales of its smaller diesel engines have slowed, and it is all because of the rival petrol engines“We are seeing a bit of a (diesel sales) plateau, which is probably reflective of advances with the (petrol-fuelled) TSI engines that we’ve introduced over the last few years,” Mr Gehling said.

“The gap between the petrol and diesel engines in terms of (fuel) economy has dropped significantly, which obviously takes away one of the arguments for the choice of diesel over petrol,” he said.

Mr Gehling said the mix of petrol-to-diesel sales varied according to the model.

“With the Passat range the 125TDI (2.0-litre four-cylinder turbo-diesel) engine has been our strongest seller, and diesel is still by far the greatest proportion of our sales.

“As we move down to smaller models, the petrol (cars) have really taken up a bigger share of the sales - it’s not an across-the-board move, but it depends on the particular model.”

Mr Gehling said the larger the vehicle, the more likely a buyer would favour a diesel engine under the bonnet.

“It’s got to the point that with (the) Touareg (large soft-roader) we discontinued the FSI V6 (petrol engine) in favour of an all-diesel line-up, because the demand for a large petrol (engine) was so small in that model,” he said.

“It comes down to preferences in a smaller car. Some people prefer the high torque and more relaxed driving style of a diesel - it’s a more effortless engine - whereas obviously when you go into a large vehicle there’s a clear benefit … you get a fuel consumption saving.

“You have to be very passionate about petrol if you want to have a large SUV with a petrol engine, as there’s a big shift away from petrol cars with a large engine.”

Caltex Australia’s Sam Collyer says while sales of diesel passenger cars appear to be moving up and down over time, overall the popularity of oil-burning cars was expected to increase.

“Any time we’ve been asked ‘what is the prognosis for diesel’ the answer has been that it’s heading up, certainly in comparison with petrol,” Caltex Australia spokesman Sam Collyer said.

“Certainly in Australia it is still heading up, and from the commercial space and the retail sales of diesel, it will be our expectation that it will continue to grow.”

Mr Collyer said the fuel supplier was anticipating that extra growth by installing more diesel fuel pumps at its suburban retail outlets.

Over at Shell, head of Australian media relations Paul Zennaro said his fuel retailer was planning for similar growth in diesel fuel sales.

“While the retail sales (of diesel-engined cars) may fluctuate from time to time, we definitely see an upward trend in diesel sales,” he said.

“We look at the national car park having a 10-year turnaround, and on that basis we see diesel sales continuing (to grow).”

Mr Zennaro said the slowdown in diesel passenger car sales was probably more due to the lack of availability of cars than buyers losing interest.


In terms of what we see happening, particularly in the Australian context, is the long-term demand of diesel in passenger cars increasing,” he said.

According to Caltex’s Mr Collyer, while no one can yet rule on the future of fuel supplies is uncertain, the diversity of fuels that cars can run on is a direct benefit to buyers.

“What we do know is that there has never been more choice in the range of vehicle types on the market and, as a result, the variety of fuels available – be it petrol, diesel, LPG, flex-fuel, electric or hybrid,” he said.

“This is very beneficial for motorists as they seek to find a vehicle type that suits their needs.

“Any new model entering the market competes with the existing range of vehicles available, including those that use petrol, diesel, LPG, electric or flex-fuel.” Mr Collyer said the advances in engine technology and the flow-on effects of better fuel efficiency would also continue to benefit buyers.

“This ultimately influences vehicle choice as motorists compare the performance and operating costs associated with each model and the engine options where they are available, such as petrol, diesel or hybrid,” he said.

In the meantime, though, commercial vehicles featuring a diesel drivetrain are continuing to grow strongly, selling in numbers that double the passenger car volumes.

When it comes to carrying the load of diesel’s popularity, the commercial sector, it seems, is the one currently doing most of the heavy lifting.