A few weeks ago, the outlook for German diesel demand looked quite clear — consumption in Europe’s largest market is falling for the first time in more than a decade because diesel cars are going out of fashion. But this is not quite true. The picture is far more complex, and is changing again this year.
Initial official statistics showing a drop in German inland diesel deliveries of more than 3pc last year have been revised down to just 1.3pc — close enough to zero to be within a statistical error margin.
Still, diesel demand grew at 3pc/yr over the previous 10 years, so the change is noticeable.
Germans did buy fewer diesel cars last year — registrations fell by a whopping 17pc. But only 7pc of the car fleet is renewed each year and the share of diesel in new registrations still mirrored that of cars on the road. So the number of diesel cars circulating hardly fell, and the effect on fuel consumption would have been negligible. To consume less diesel, car owners would have had to drive fewer miles.
The main suspect has to be road freight, which uses about half of Germany’s diesel.
When surveyed by Argus, most logistics companies said that they would have expected diesel consumption to have gone up or remained stable last year, when they were busier than ever.
Demand for road freight tends to go up and down with the general economy, and Germany’s GDP grew by 1.5pc last year.
But their impression could well be wrong, because the transport of goods was significantly constrained by a long period of low water levels on the Rhine in July-December. A shortage of truck drivers prevented transport from simply shifting to the road and, partly as a result, GDP was negative or flat in the last two quarters.
Problems importing diesel on the Rhine may well have distorted figures for inland deliveries — the official numbers used to gauge demand. Receipts suddenly jumped up again by 6pc in January-February after Rhine levels normalised, suggesting they also captured an element of storage demand, while actual consumption is probably less volatile.
But this cannot fully explain last year’s fall in inland deliveries, because they were already down in the first half of last year, before the shipping problems started.
Freight managers at the giant Transport Logistic fair in Munich last week speculated that the answer must lie in more fuel-efficient lorries, although none thought that there had been a significant improvement in lorry engines or aerodynamic design in the past year.
They said it was probably too early for fuel savings from the latest technology to optimise routes and lorry capacity usage. But perhaps their collective feeling lags slightly behind reality.
This spring and summer, a drop in freight demand is likely to lead diesel demand, if indications from the freight capacity spot market are anything to go by. More capacity is available and prices are falling. In March — the latest month for which official figures are available — diesel demand was not only down on the year, by 2.4pc, but also the lowest March figure since 2014.
For the time being, freight is the sector to watch for diesel demand, not cars.
New diesel car registrations are 4.5pc higher this year, and even the share of diesel in new cars went up slightly. Whatever people say about diesel cars, the number of them on the road is not changing much.