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Has petrol had its day?

Has petrol had its day? If you look at recent sales figures both for diesel fuel and diesel-engine vehicles, it doesn’t seem such an unreasonable question.

Figures published earlier this month by the AA show that UK petrol sales fell by almost a quarter between 2007 and 2012.

But over the same five-year period, the amount of diesel sold on the nation's forecourts rose by 13 per cent.

Rising prices

AA president Edmund King said that a fall in overall fuel sales was down to rising prices.

He added that the increased take-up of diesel cars and vehicles with smaller petrol engines had also played an important part.

Meanwhile, according to statistics from trade body the Society of Motor Manufacturers and Traders (SMMT), diesels accounted for more than half of all new car sales in both 2011 and 2012.

So what's behind diesel's rise?

It's the economy, stupid

According to Jim Holder, editor of motoring magazine Autocar, there are a number of factors that have contributed to diesel’s increase in popularity.

"Improvements in technology have made diesels more efficient, and motorists have become more price conscious," Holder says.

He adds that there are significant benefits to company car drivers.

As well as better fuel economy, diesels tend to produce lower emissions than their petrol counterparts, which means lower tax bills.

"And modern diesels aren't the smelly, clattery vehicles they were 20 years ago," Holder says.

"Even the bad ones today are acceptable in terms of performance."

Long-term savings

Diesel sales have risen despite the fact that both the fuel and the cars themselves tend to be more expensive.

According to the website, at the time of writing the UK average price for a litre of unleaded was 137p, with a litre of diesel at just under 142p.

And a typical diesel-powered vehicle costs between £1,000 and £2,000 more than its petrol equivalent.

But because diesels do more miles to the gallon, buyers expect that over the long-term, they will save money.

Do your sums

What this means is that diesels are better suited to motorists who use their vehicles a lot.

If your car is just used for the school run and to nip to the shops, for example, it is unlikely you will generate enough fuel savings to offset a diesel model’s higher purchase price.

Luke Bosdet from the AA says: "You need to do a substantial mileage to recover your start-up costs.

"If diesel is between 10p and 15p a litre more expensive, it will take 40,000, 50,000 or 60,000 miles to make up the difference, so you have to do your sums carefully."

Future trends

There are, however, a number of factors that could affect diesel's popularity in the coming years.

"Diesel engines are getting more expensive to build," Holder says.

"The new EU 'Euro 6' emissions regulations, due to come into effect in 2014, are more stringent so production costs will rise."

He adds that many manufacturers are moving towards petrol hybrid engines, which use electric motors to generate some of their power.

"Petrol hybrids are not just cheaper, but they can offer better economy on smaller engines."

Industrial demand for diesel

And Bosdet says that any future rises in the cost of diesel could swing the balance back in petrol's favour.

"When economic demand and industrial production picks up in Europe, this will lead to higher prices for diesel," he explains.

"When you decide what kind of engine to go for, you are to some extent taking a gamble on the future.

"But I wouldn't bet my mortgage on petrol phasing out diesel."

Holder says: "I don’t think diesel sales increase will carry on accelerating at the same rate as in the past couple of years.

"As the price of fuel increases, people will travel less, and smaller petrol hybrids will be more compelling, especially for city drivers."

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Chris Torney

Chris Torney

Chris is the former personal finance editor at the Daily Express. He's been a journalist for more than 10 years and contributes to a wide range of finance and business titles.Read more from Chris

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