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Is diesel still the best option for company car drivers?

  • We take a closer look to find out if diesel is still the fuel of choice
  • Smaller, turbocharged petrol engines can now deliver low CO2 emissions
  • With higher P11D prices, does diesel still make sense in your company car?

Diesel has been the preferred company car choice for years now. The greater fuel economy and lower CO2 emissions it offers usually offset the higher P11D price.

In general this means cheaper BIK tax bills over petrol alternatives, despite the premium the diesel engine commands in the showroom.

However, with petrol engines getting cheaper and cleaner we’re having a look at whether diesel is still the best choice, and reveal all you need to know about choosing your next company car in this post VW "dieselgate" era. 

Company car tax

Tax bands are going up each year, so what you decide now will have a lasting effect. When choosing your company motor, think ahead to the next three or four years. 

Diesel cars are punished via a three percent surcharge on BIK bands. This was due to be scrapped but will remain in place until 2021.

Given that diesels generally emit less CO2 than petrol engines, despite the higher P11D price, they are usually the cheaper option in tax.

Fuel consumption

The price of fuel has been yo-yoing over recent years and although diesel slips below the cost of petrol from time to time, there's no word on the longevity of each shift.

Despite advances in petrol engine technology, diesel is almost always the most economical choice like-for-like and if you travel a lot of miles each year - especially on motorways - you’ll see a tank of fuel go much further with diesel. That's good news if you pay for your own personal mileage.

So even though there's a P11D price increase in place for picking most diesels over petrol, monthly BIK tax bills are usually lower because of the lower emissions and if not, the extra cost can quickly be recouped through saved fuel costs.  

The pros for diesel:

  • Lower tax costs
  • Lower fuel consumption and lower fuel prices for now
  • New Euro6 engines are cleaner and more efficient

The downsides to diesel:

  • Generally higher P11D prices
  • Engines not usually as refined as petrol choices
  • Not usually as fun to drive 

So is diesel still the way to go?

There has been plenty of negative press surrounding diesel and tighter legislation being introduced means new engines will have to produce fewer emissions.

From a cost point of view diesel is still the fuel of choice for superior fuel economy and will keep running costs low. Although petrol engines have done a lot to improve emissions and fuel economy, you usually need to downgrade to a smaller engine if you want to match a diesel's emission and fuel economy figures. Do this and it also means sacrificing some performance.

So for now diesel is the way to go. Make sure you keep checking back with us at Parkers to keep up to date on all the latest developments.

Below we’ve got some examples of how petrol and diesel company cars compare.

BMW 3 Series

 

320d EfficientDynamics Plus

320i SE

Engine

 Diesel

Petrol

Gearbox

 Auto

Auto

Price

 £32,220

£28,860

CO2 emissions

 99g/km

129g/km

Range

 927 miles

673 miles

2016/17 monthly tax costs*

 £101.27

£104.94

2017/18 monthly tax costs*

 £111.93

£114.48

MPG

 74mpg

51mpg

Power

 160bhp

181bhp

0-62mph

 7.6 seconds

7.1 seconds

Ford Focus

 

1.5TDCi Titanium

1.5 EcoBoost Titanium

Engine

Diesel

Petrol

Gearbox

Manual

Manual

Price

£21,545

£21,345

CO2 emissions

99g/km

127g/km

Range

862 miles

617 miles

2016/17 monthly tax costs*

£67.26

£77.14

2017/18 monthly tax costs*

£74.34

£84.16

MPG

74mpg

51mpg

Power

118bhp

147bhp

0-62mph

10.2 seconds

8.6 seconds

*Monthly tax costs are based on a 20 percent tax payer assuming no optional extras

VW latest

The Volkswagen Group's Euro5 diesel engine performance has been called into question, which has also shifted the focus onto the testing process as a whole for all car emissions and fuel economy data.

More than a million vehicles have been affected here in the UK and the German firm put together a recall programme. There’s also a VIN checking system live on the Volkswagen website so you can check if your car is affected.

So how will this affect you?

The Government has announced that company car drivers (and retail buyers) will not be affected financially even if emissions have increased. So your BIK tax will remain the same as when you chose your car. 

Although it is yet to be confirmed when or how, the European testing process for all cars will inevitably change to become more accurate. This suggests some diesel cars may become more expensive to tax in the future and petrol could become a more desirable option.

There's also been a great deal of speculation in the past about additional charges for driving diesel cars in cities. It's still just speculation though, and we'd expect plenty of notice should any changes be imposed.  

Need more help choosing your next company car? These articles may help:

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Top tax-busting diesel company cars

Top five company cars coming soon

New company car kit to consider in 2015