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Heraeus Precious Appraisal

  • Edition 19 - 17 June 2019

Has diesel turned the corner in Germany?

Diesel car sales jumped 16% year-on-year in Germany in May and are 4.5% higher year-to-date. Overall car sales were up 9% in May to over 330,000 (source: KBA). The diesel share of the market was 33.3% and appears to have stabilised at around 33% this year. It has recovered from a low of 29.3% in September 2018 when automakers had been unable to certify all their models in time for the introduction of real-world driving tests for emissions.

The latest diesels are clean and beat gasoline on CO2 emissions. Independent testing by ADAC (Allgemeine Deutsche Automobil-Club) showed that Euro 6c and Euro 6d-TEMP cars were well below the required NOX limits. Diesel vehicles have lower CO2 emissions per kilometre than equivalent petrol vehicles. From the automakers’ point of view, diesel cars are necessary to help meet the emissions target of a fleet average of 95 g/km of CO2 in 2020. City bans may have discouraged some private buyers, but purchases for business fleets are around 60% diesel as it makes sense economically for high mileage users.

Western European platinum demand for cars peaked in 2016 at 1.2 moz, when the diesel share was 49.5%. With the decline in diesel car sales, platinum demand has now fallen by over 40% in Western Europe. Germany is the largest car market in Western Europe and the amount of platinum used for catalysts in cars is projected to be around 275 koz this year, assuming a 31.5% diesel share, which is down from 45.9% in 2016. If the diesel share were stable at 33%, it would add an extra 10 koz to platinum demand and double that next year, as the market share is currently forecast to continue to decline. The impact would be larger if the diesel share of the European market as a whole stabilised. However, the platinum market is oversupplied and it will need much more than a stabilisation in the European diesel car market share to balance the platinum market and lift the price.

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Heraeus Precious Metals - Setting the PGM agenda for the years ahead

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