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Car scrappage scheme affects platinum demand

Car scrappage schemes across Europe have led to a fall in platinum demand as car-owners opt for smaller petrol cars rather than diesel engines, affecting catalytic converter trends.

Smaller, cheaper cars tend to use palladium in their catalytic converters while diesel engines use platinum. Therefore incentive schemes have helped to push European platinum demand for the automotive sector down by 45.7 per cent or 900,000 oz to 1.07 million oz. Additionally, fleet sales of vehicles, which are usually diesel fuelled, have decreased.

In contrast, palladium demand in Europe is set to decrease by just 20,000 oz from 2008 levels, benefitting from the higher levels of gasoline cars being bought.

Precious metals assayer Johnson Matthey states in its interim platinum review 2009 that where incentive schemes have been put in place to boost the car manufacturing industry by encouraging people to scrap their old vehicles and buy new ones these have often been smaller, cheaper models, where diesel engines do not demonstrate their full economic value or where diesel variants are not available.

Johnson Matthey publications manager David Jollie said: The schemes have altered the market. They have driven people to buy gasoline cars because the incentive makes a significant difference to the price of smaller, cheaper cars rather than more expensive diesel cars.

Sales of diesel cars will pick up next year because once the scrappage schemes stop, people will end up buying the cars they want to buy.


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