Is it the End of the Road for Petrol and Diesel Cars?

Consumers are showing increasing interest in alternative-powered vehicles (APVs), with growing hesitancy towards traditional combustion-powered cars. But where is all this leading? With a trend towards electric across Europe, could this potentially be the end of the road for petrol and diesel cars?

Is the motor trade industry as we know it disappearing?

With the government working towards European carbon emission targets and a goal for reduced pollution in our cities, we’ve seen a recent wave of policies that have seriously impacted the state of the transport sector in the UK.

For many, increased road taxes, higher parking fees and more low-emission zones restricting high polluting vehicles are all a sign that we are gradually coming to the end of the road for petrol and diesel cars. So what does this mean for the motor trade sector? And will your motor trade insurance cover your business if your stock changes to more electric and hybrid vehicles?

It started with diesel

“Drivers of older petrol models will also feel the burn as next year’s ultra-low emission zones (ULEZ) take effect.”

Tax increased for millions of diesel drivers at the beginning of April, following the Chancellor of the Exchequer’s announcement of higher charges. Drivers faced up to £500 of added tax, depending on the emissions output of their vehicles.

Drivers were effectively required to pay more for all cars not meeting the Euro 6 emission standards. Since the government’s tough stance against diesel, we’ve seen a resultant drop in new diesel vehicle registrations across the UK.

While newer diesel models that do conform to regulations are currently safe from these new taxes, older diesel car drivers are likely to keep feeling the squeeze. Among the challenges for these drivers is the introduction of clean air zones, set to further restrict the use of high polluting vehicles within populated areas. London has already begun operating its T-Charge, targeting extremely old vehicles with a £10 a day charge for navigating the busiest areas of the capital.

Drivers of older petrol models will also feel the burn, as next year’s ultra-low emission zones (ULEZ) take effect in London from 8 April 2019, with a £12.50 per day charge for certain vehicles bought before September 2015.

Goodbye conventional combustion engine

Volvo was the first to announce that all manufactured cars will either be electric or hybrid by 2019.”

Britain will ban all new petrol and diesel cars and vans from 2040. This has been decided amidst fears that rising levels of nitrogen oxide pose a major risk to public health, as well as growing concerns over climate change. The French government also made a similar pledge as part of their plan to meet targets under the Paris climate accord.

“Poor air quality is the biggest environmental risk to public health in the UK and this government is determined to take strong action in the shortest time possible,” said a spokesperson from the UK government.

The next step is for more major car manufacturers to get on board with plans to phase out traditional combustion engines in favour of their electric or hybrid counterparts. Volvo was among the first major car manufacturers to announce that all manufactured cars will either be electric or hybrid by 2019.

The result of all this will be the end of traditional petrol or diesel powered vehicles on UK roads, and their replacement with cleaner, greener, low carbon alternatives in the not too distant future (if all goes to plan).

Hello electric

“E-mobility is unstoppable; it’s just a question of how fast and how deep it will be deployed.” – Ulrich Spiesshofer – chief executive at ABB.

So what’s the alternative? According to the European Automobile Manufacturers Association, there has been a rise of 47 per cent in the number of registrations of electrically-chargeable vehicles (ECVs) between January and March 2018. We are seeing this trend take place in many European countries with Germany, France and Spain, all indicating a rising demand for alternatively-powered vehicles (APVs).

Air pollution data released this year from the World Health Organisation (WHO) revealed that almost 50 towns across Britain fail to meet standards for fine particle air pollution (PM2.5). It’s no shock therefore that the government will continue to push forward its agenda when it comes to reducing carbon emissions, especially in highly populated urban areas.

As consumer understanding and demand increase, and infrastructure, manufacturing and availability make it more practical to go electric, things appear to be moving ever further towards a completely electric transport sector in preparation for the eventual 2040 ban.

Ulrich Spiesshofer, chief executive of the leading supplier of automotive technologies and manufacturing company ABB, this year said: “E-mobility is unstoppable, it’s just a question of how fast and how deep it will be deployed. The UK has a big population that really wants to contribute to a greener, more sustainable world.”

Uncertainty ahead

“Outright bans risk undermining the current market for new cars and our sector which supports over 800,000 jobs across the UK.” – Mike Hawes, chief executive of the SMMT

Sceptics are concerned about the impact these changes will have on a UK industry that is so fundamental to the national economy. Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, said: “Outright bans risk undermining the current market for new cars and our sector which supports over 800,000 jobs across the UK”. Instead, he calls for more government incentives for drivers to purchase these alternative-fuelled vehicles.

Although we know the direction we’re travelling in, it is still hard at this stage to imagine a complete overhaul of the motor trade industry as we know it. Buyers are likely to buy petrol and diesel cars that meet government regulations until there’s a more viable and affordable option for them and until infrastructure fully supports electric cars. But if you ask us, it’s only a matter of time until this happens.

Motor trade insurance in an electric world

“ChoiceQuote has the expertise to provide the cover you need to keep your business safe.”

As car types evolve over the coming years, so too will insurance requirements. With more electric and alternative-powered vehicles entering the market, those in the industry need to make sure their motor trade insurance covers their changing stock.

Make sure both your cars and your team are effectively covered. If you need to refocus your business around the electric industry, make sure you are fully aware of the regulations and risks involved when handling electric and hybrid vehicles.

Things need to be considered from all angles. On a practical level, there is the potential increased risk of accidents on a forecourt due to the lack of noise from an electric vehicle. Meanwhile mechanics and repair businesses might want to take into account the different kinds of issues that can arise with electric vehicles, particularly any troubles with batteries which will be among the most expensive problems to resolve.

ChoiceQuote has the expertise to provide the cover you need to keep your business safe. If you’d like to find out more, get in touch and we’ll help you find the right policy appropriately tailored to your business and your stock.