Thousands of jobs in the UK car industry are under threat as diesel vehicle sales slump due to tax increases and negative publicity, experts have warned.
According to sources, executives are preparing for redundancies, with the rush to embrace electric vehicles adding to the pressure on diesel. Last year, sales of diesel-powered vehicles in the UK plummeted by 17.1% to just over 1 million.
One industry source said the focus on electric, allied to a recent tax increase on diesel cars, poses a serious threat to a vehicle type that accounted for nearly 38% of car sales in 2017.
“It’s created a cliff edge for diesel. Diesel should have been phased out and electric phased in. Our government has tightened the noose [with a duty increase on diesel vehicles in the budget]. The government should have realised this was not good for employees. In the short term, it will create unemployment.”
The uncertainty created by the death of the diesel engine has already begun to hit home. Last week, Vauxhall announced it was cutting a further 250 jobs at its troubled Ellesmere Port site in Cheshire. The Astra maker had already cut 400 of its 1,800-strong workforce last year. The UK automotive manufacturing industry directly employs 169,000 people.
Potential buyers are also shunning diesel vehicles following the so-called “dieselgate” scandal in 2015 when it emerged that Volkswagen had cheated regulators and misled customers by using software to suppress emissions of nitrogen oxide during vehicle tests.
Since the scandal broke, industry and politicians have backed electric cars heavily. BMW plans to build a fully electric version of the Mini at its Cowley plant outside Oxford from 2019. Volvo has announced that from the same year, all its new models will have an electric motor. VW has earmarked €70bn (£62bn) to produce battery-powered versions of all models by 2030. Governments in France, the UK and the Netherlands have also backed plans to ban the sale of diesel and petrol vehicles between 2025 and 2040 in a push to clean up polluted cities. This has left diesel cars in the lurch.
There were more dramatic warnings last week that the worst is yet to come for diesel cars. Academics at Aston University predicted they will account for just 15% of the UK market by 2025. Automotive expert Prof David Bailey said diesel’s “slow death” was being driven by environmental pressures, consumer confusion, strict regulations and sinking secondhand values.
He added: “Diesel cars face a raft of challenges, each one of which could damage sales, and which are combining to kill off the domestic diesel sector, which was so rattled by the ‘dieselgate’ scandal.” Aston University expects a further 10% drop in sales this year. Bailey urged the government to set up a scrappage scheme to encourage drivers to switch to electric cars.
“Now that it’s clear diesel is dying a slow death, the time is right for the government to take the initiative and offer up scrappage benefits to those who are prepared to ditch their diesels and switch to electric cars,” he said.
Prof Karel Williams at Manchester University noted the car sector was battling on three fronts.
“The industry is desperately trying to keep cashflow going to invest in new electric models but there are three things against them in the UK. First, the industry has been lying about emissions; second, there is the diesel sales issue, which is Europe-wide; third, there is Brexit,” Williams said. “The industry is quite desperate. If you put together these problems, I think it’s inevitable that jobs will go.”
Another industry source agreed: “There is a sense of alarm about this issue. People have made fine declarations (about cutting diesel to go electric), but the implementation is going to be painful.”
• Follow Guardian Business on Twitter at @BusinessDesk, or sign up to the daily Business Today email here.
