While there has been an across marketplace adjustment downwards of the residual value premium enjoyed by diesel cars over their petrol-engined equivalents, in some sectors of the marketplace - notably sub 120 g/km where Vehicle Excise Duty is only £35 a year - the premium has in fact been maintained and has perhaps increased, according to market watchers.

Demand for diesel cars was fuelled by the 2002 change in company car tax to an emission-based system. Just as businesses and company car drivers reacted to the MPG and low emission benefits of diesel cars so private used car buyers are now discovering those identical credentials.

This year diesel car sales are expected to reach a record 935,000 units to take a near 40% market share. That is 37,000 units up on last year and compares with average diesel registration from 1999-2005 of almost 585,000 (23.7% market share).

It is many of those cars at three or four-years-old with upwards of 60,000 miles on the clock that are now being defleeted by companies. But, with the number of diesel cars motoring into the used car market over the coming years set to increase, optimism is high that secondhand buyer demand will stave of any threat of an RV decline.

Jeff Patterson, chief car editor at EurotaxGlass’s, publisher of Glass’s Guide to Used Car Values, said: “The diesel used car value crash predicted by some people has not happened. While we have seen a readjustment in the market due to increased supply, values have not fallen into an abyss and they won’t. In fact, in some sectors - sub 1.4 diesel - premiums have been maintained and probably increased.

“Just as awareness of diesel cars has grown among fleets and company car drivers so that awareness is now growing among used car buyers and they are receptive.”

While, there has been a narrowing in the percentage premium of petrol versus diesel, Mr Patterson said a cash premium in favour of diesel would always exist because of the typically higher new car price. That differential could be around £500 for a lower medium sector car, he speculated.

Value for money drives used car buyers, according to Martin Ward, manufacturer relationship manager at CAP Motor Research, publishers of Black Book, who said: “They want the best possible car at the lowest possible price and with low running costs. Big petrol cars are dead in terms of value when compared with diesel models, equally small petrol-engined cars will continue to hold their own in comparison with diesel values.

“A few years ago I thought there maybe a diesel RV crash, but private buyers have switched on to diesels and the performance they offer. They talk to their friends and while diesels maybe a relatively new phenomenon to secondhand buyers they are increasingly recognising their merits.”

Colleague Jeff Knight, forecast manager for CAP, added: “Affordability as well as value for money is the key concern for used car buyers, which is why we see the premium for diesel over petrol continuing unchecked in the immediate future.

“This position is only likely to change if petrol engine technology develops to the extent that it can offer similar benefits to that of diesel technology - low emissions and fuel economy.

“The benefits of diesel over petrol is most clearly seen among larger cars and in the 4x4 sector where the better performance of diesels is underlined with significantly higher RVs.”

It’s a view shared by Rob Barr, group communications director of leading vehicle auction company Manheim, who said: “It’s clear that while the volume of diesels coming back from the fleet sector is increasing, prices are still holding up. Market demand seems to be moving in line with the increased supply of used diesels which is keeping prices relatively strong

“Our research shows that more retail motorists are actively seeking out used diesel models as they understand the inherent fuel consumption benefits and longevity that diesels offer. The diesel technology is also so much more refined than it was a few years ago.”

Meanwhile, rival auction company BCA take a slightly different view and claims that while diesel values were roughly 5% ahead of petrol throughout 2006, that differential has been narrowing in recent months.

Tony Gannon, BCA’s communications director said: “The eroding in the price differential started earlier this year and almost certainly reflects the increased numbers of diesels entering the fleet market as new cars some three years ago.

“With fleets registering increasing numbers of diesel cars in recent years, it is tempting to suggest that used fleet diesels will continue to get relatively cheaper. However, the market dynamics are not that simple. If motorists follow the lead set by fleet operators - as they inevitably do - we could see increased demand for used diesels matching the rising supply of stock available to the market.”

Manheim calculates the split between petrol and diesel of the total number of ex-fleet vehicles entering the used car marketplace is now 52%:48% in favour of petrol, but in overall terms, diesels are averaging 38% of cost new and petrols 33%.

“This does reinforce the view that demand for used diesels is keeping pace with the additional supply coming to the market,” said Mr Barr, while highlighting that diesels were typically seven months younger on average and had covered 20,000 miles more than their petrol counterparts.

However, what appears certain is that while price parity between diesel and petrol cars at the small car end of the marketplace is likely to remain close, the environmental credentials and MPG benefits of large diesel models compared to higher emission more fuel hungry petrol cars will be reflected in their used values.

Fleet operators should therefore look closely at the relative price performance between the fuel types in each of the main volume segments. These, according to Manheim, range from the worst performer being large family petrol models, sitting at an average £4,065, only 25% of original cost new price (at 49 months/63,000 miles) - the diesel equivalent has an average value of £5,455 (32%) at 40 months/67,500 miles - to compact executive diesel models, which are among the best performers averaging £9,111 or 42% of cost new (at 38 months/67,000 miles) with petrol models averaging £8,201 or 37% of cost new at 49 months/60,000 miles.

But the disparity in used values is greatest in the 4x4 sector where on average diesel models are fetching 43% of their cost new against just 30% for petrol-engined variants.

With, the government continuing to base its motoring tax regime on vehicle CO2 figures and fuel prices continuing to rise, the lower emission and higher MPG qualities offered by diesel models in comparison with petrol vehicles look set to win increasing support among used car buyers so maintaining residual value.-Renault