Nissan Withdrawing From European Diesel Market, Rest of Japan Likely to Follow
Despite recent claims from Bosch that it’s prepared to save the diesel engine from becoming outlawed in Europe (which is like a prettier and less-free version of America), Nissan has announced its intent to withdraw sparkless motors from the market. Thanks to dwindling demand, the automaker claims it’s going to begin a gradual retreat until it no longer sells diesel vehicles in the region.
The announcement follows a similar plan unveiled by Toyota in March of this year and calls into question what the remaining Japanese manufacturers will decide in the months to come. Nissan said Monday that it will shift its focus to electrified vehicles, hoping the emerging technology can fill the void. But European manufacturers have the most to lose as the market changes.
“The Japanese especially I could see doing this, since they were more skeptical of the technology from the beginning and don’t have a lot of competence in the field,” Stefan Bratzel, director of automotive management at the University of Applied Sciences in Bergisch Gladbach, Germany, told Bloomberg in an interview.
However, Japanese manufacturers accounted for just over 12 percent of European deliveries last year and the majority weren’t diesels. Around 16 percent of Nissan’s European volume comes from diesel variants, which is higher than other Japanese automakers but insignificant compared to domestic models.
BMW’s fleet, which includes Mini, was 64 percent diesel in 2017 and Mercedes-Benz stood at 62 percent. Meanwhile, Jaguar Land Rover sat at an astronomical 90 percent. Stricter emissions limits, new taxes on diesel vehicles, and looming bans are suppressing sales, and European automakers have far more to lose than their Japanese counterparts. This level of reliance on one fuel type will cause major problems as its market share dwindles.
The silver lining is the gradual nature of the diesel decline. Already losing popularity before Volkswagen’s emission cheating scandal in 2015, the subsequent drop in volume hasn’t sheared its market share off at the knees. But the drop is significant. Market penetration for diesel vehicles sat at 52 percent when news of the scandal broke; it’s now closer to 44 percent.
Analyst projections vary, but the general consensus sees Europe’s diesel market shrinking to around 40 percent by the end of the year. IHS Markit anticipates the gradual decline to continue, with sales around 32 percent by 2025, though other sources estimate numbers as low as 12 percent within the same timeframe. We expect the final tally to be highly dependent upon the speed of electric vehicle technology development and EU regulations in the near future.
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