Another man's treasure

Eastern Europe's appetite for dirty old diesels

used, diesel, vehicles, germany, eastern europe, romania, hungary, slovakia
Baby you can drive my diesel. Source: Aaron Roberts for WirtschaftsWoche

German diesel owners are down in the dumps about their vehicles potentially being banned, but there could be a silver lining. It is a market lined with old cars, in a field in Romania, smelling of sausages, exhaust fumes and chicken poop.

It’s where used diesel BMWs, Opels, Mercedes and VWs from Germany are resold, one of many markets throughout eastern Europe where people are hungry for vehicles that work, and not picky about exhaust fumes. The value of diesel-powered autos from Germany has fallen dramatically after Volkswagen was revealed to have systematically been cheating emissions values. That loss has been compounded by the threat of diesel bans in cities, as lawmakers seek to reduce air pollution.

That appetite for old cars is not confined to Romania’s Cluj-Napoca market, lined with rows of battered cars. Takers for those autos can be found in Serbia, Kosovo and Albania; dealers drive from Hungary and Slovakia to buy up rusty old German vehicles. The Russian market has collapsed with the fall of the ruble, one dealer said. The very oldest cars, with the lowest level of certification, are often sold in Georgia.

It is an elegant solution to a problem for German car owners: what to do with their dirty diesels.

Buyers drive hundreds of miles to Germany, to collect the lemons at parking lots, airports or bid for them at auction houses. Or they pick them up on German internet platforms where older cars are sold, such as Mobile.de and autoscout24. Buyers get the vehicles fixed for peanuts back home, if necessary. Even if a car is so old it can no longer drive, there’s still a margin to be made on its parts.

It is a risky business for the dealers who drive across to Germany to pick up the cars and resell them at home. Up to 80 percent operate on the black market, buying the cars with piles of cash. Those who sleep in their vehicles to save money on hotels on the journey risk being targeted by thieves. But there is the promise of profits: After paying repairs, customs and transport, one Albanian dealer was going to make €300 on the car.

It is an elegant solution to a problem for German car owners: what to do with their dirty diesels. German exports of used diesels increased to 233,321 last year, up 18 percent on the year earlier. Most went to eastern Europe; 11,841 cars went to Hungary, 9,439 to Slovakia and 10,899 to Romania.

That market is also a relief for Germany’s beleaguered car dealers who have seen the value of a used diesel drop by 50 percent, according to a survey by a dealers’ association, the Zentralverband Deutsches Kraftfahrzeuggewerbe (ZDK), for WirtschaftsWoche, a business magazine. A third of dealers can’t sell diesels that are compliant with Euro 5 emissions standards unless they refit them to clean up their emissions; a third more can only move them with a 50-percent discount.

Even newer diesels, compliant with Euro 6 regulations, are hard to sell as buyers worry about bans in cities. According to Ferdinand Dudenhöffer, a professor who covers the car business for Duisburg-Essen university, dealers lost €1.7 billion in the last year alone due to lower resale prices and higher inventory costs. He forecast those loses will amount to an additional €2 billion this year and €1.5 billion in 2019. That’s a conservative estimate.

Buyers from across eastern Europe might just be rubbing their palms.

This article originally appeared in WirtschaftsWoche. To contact the author: andreas.macho@wiwo.de

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