The European Central Bank has published a working paper, reflecting the authors’ views rather than the ECB’s, on how auto lenders adjusted used-car loan terms after the 2015 diesel emissions scandal and the rollout of low-emission zones. Using European loan-level data, the paper finds that captive lenders owned by car manufacturers often supported diesel vehicle financing instead of fully pricing higher environmental and regulatory risk, while independent banks were more likely to raise borrowing costs when diesel vehicles became subject to binding circulation restrictions. The analysis covers 843,889 used-car loans originated in France, Germany, Italy and Spain between 2008 and 2018. After Dieselgate, captive lenders reduced interest rates on diesel loans relative to independent banks and increased loan-to-value ratios, with the strongest effects for vehicles made by their own parent manufacturers. In Germany, independent banks increased diesel loan rates by an average of 18 basis points in counties affected by low-emission zone introductions or upgrades, with larger increases as stringency rose, while captive lenders adjusted loan rates less and shifted more through collateral terms. The paper also finds no evidence that lenders changed diesel loan conditions in anticipation of future restrictions solely because local nitrogen dioxide readings had breached the EU limit before low-emission zones were formally introduced or tightened.
European Central Bank 2026-05-11
European Central Bank publishes working paper finding captive lenders eased diesel car loan terms after Dieselgate while independent banks priced low emission zone risk
The European Central Bank has published a working paper on how auto lenders adjusted used-car loan terms after the 2015 diesel emissions scandal and the introduction of low-emission zones. Using 843,889 loans from France, Germany, Italy and Spain between 2008 and 2018, the authors find that captive lenders owned by car manufacturers supported diesel vehicle financing by lowering interest rates and increasing loan-to-value ratios, while independent banks raised borrowing costs in response to circulation restrictions. The paper finds no evidence that lenders adjusted diesel loan conditions in anticipation of future restrictions based solely on prior nitrogen dioxide limit breaches.