The demand for diesel vehicles is expected to increase substantially over the next five years, it has been estimated.

The Financial Times has reported that UBS believes US demand for diesel vehicles will grow from around 500,000 vehicles today to around 1.5 million units by 2012. The company has suggested that this will lead to a much greater uptake in demand for platinum, as manufacturers need to use more environmentally-friendly and fuel efficient methods to stay within strict emissions rules.

According to current estimates, such an increase in demand for diesel vehicles would result in a major increase in the need for platinum, requiring 400,000 ounces to satisfy the diesel market alone. That represents six per cent of the current global supply of platinum.

At the same time, platinum is likely to see more demand from other forms of car manufacturing, the Financial Times reports.

Development of hybrid vehicles will also see an increase in demand for platinum and palladium for use in catalysts. At present, the higher production costs of hybrid vehicles has kept them out of the mainstream in most cases, but as production costs recede, more manufacturers will be able to provide hybrid vehicles at affordable prices to the mass market.

Therefore, the demand for platinum and palladium from the US auto industry is set to see huge growth over the years ahead.

Sources:
Platinum and US drivers
29/05/07
http://www.ft.com/cms/s/5d982f80-0dd3-11dc-8219-000b5df10621,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F5d982f80-0dd3-11dc-8219-000b5df10621.html&_i_referer=http%3A%2F%2Fsearch.ft.com%2Fsearch%3FqueryText%3DPlatinum+and+US+drivers

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