Sparesbox Blog

German Court Prepares to Deliver Diesel Decision that Could End the Industry

By Liam Ridings

Tue Feb 20 2018

Diesel cars in Germany could be on borrowed time as a pending court decision on an environmental group’s lawsuit threatens to undermine the entire German automotive industry.

Environmental group Deutsche Umwelthilfe (DUH) is suing Stuttgart and Duesseldorf to allow municipalities to ban diesel cars from city centres in a bid to enforce clean air regulations. The German Federal Administrative Court will deliver a final verdict on Thursday.

The pending outcome is reminiscent of Paris’ recent ban on all cars built before year 2000 from entering the city centre in an effort to combat pollution.

The decision handed down by the German Federal Administrative Court is likely to influence other big European cities to do the same.

Investment banking firm Evercore ISI estimates that the cost of retrofitting the entire German diesel market with petrol engines would cost between €15 billion and €29 billion Euros ($23B to $45B AUD).

Figures from London Based Analysis company IHS Markit indicate that diesel powered cars accounted for 64% of BMW sales and 62% of Mercedes-Benz sales. The news is even worse for Jaguar Landrover with diesel powered cars accounting for over 90% of sales.

Tightening emission restrictions in neighbouring countries have already caused a steady decline in diesel sales in Germany. In January 2018, diesel powered vehicles accounted for 33.3% of all vehicle sales in Germany- down from 45.1% in January 2017.

Andrew Fulbrook, executive director of global powertrain and compliance forecasting at IHS Markit, cited the VW Dieselgate scandal as the biggest catalyst for the demonization of Diesel powered cars.

“The VW (dieselgate) situation, led to confusion across the customer base, resulting in concerns over residual values, the prospect of potential city restrictions and I think to a lesser degree, genuine worries about the environment,” Fulbrook said.

Thursday’s verdict will have significant ramifications on private diesel owners with values likely to plummet if the decision is upheld.