UMTRI study finds total cost of ownership of diesels in US often much less than gasoline counterparts
09 July 2015
A comprehensive study of the total cost of ownership (TCO) of light- and medium-duty diesel passenger vehicles in the US has found that the total cost of ownership—depreciation, fuel costs, repairs, maintenance, insurance, and fees and taxes—is often much less for diesel vehicles as compared to gasoline versions of the same vehicles, mostly ranging from $2,000 to $7,000 over three to five years.
Bruce Belzowski, managing director of the U-M Transportation Research Institute's Automotive Futures group, compared thousands of gasoline and diesel versions of the same or nearly identical vehicles sold at auction in 2012-13, including Audi, BMW, Mercedes-Benz and Volkswagen passenger cars and SUVs, and Chevrolet, Ram, Ford and GMC medium-duty pickup trucks.
Though there are some exceptions to these positive results for some of the diesel versions of vehicles from a total-cost-of-ownership perspective, the overall direction of the results supports the idea that diesel vehicles are competitive within the U.S. market. In particular, the idea that buyers can get a return on their initial higher investment in a diesel vehicle within three years is a very positive sign, considering new buyers tend to own their vehicles for an average of three-to-five years.
—Bruce Belzowski
| Alternative powertrain sales |
|---|
| Sales of light-duty vehicles with alternative powertrains in 2014 was a mix of increases and decreases over 2013 sales. |
| While alternative powertrains still represent a small percentage of market share compared to gasoline engines, the report noted, clean diesels saw a 10% increase in 2014 sales over 2013 sales, while hybrids saw a 10% decrease, pure electrics saw a 20% increase and compressed natural gas saw a 33% decrease. |
The report—Total Cost of Ownership: A Diesel Versus Gasoline Comparison (2012-2013)—was underwritten by Robert Bosch LLC. Data was provided by Manheim Auctions, Vincentric, Black Book, Environmental Protection Agency, National Highway Traffic Safety Administration, Bureau of Labor Statistics, Energy Information Administration and Federal Highway Administration.
While most new diesel vehicles cost more than their gasoline counterparts—from a few hundred dollars to several thousand—resale values after three years are 30-50% higher for diesel passenger cars and SUVS, and 60-70% higher for diesel medium-duty pickup trucks. The percentages are even higher after five years of ownership.
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| Percentage differences in miles per gallon (mpg) between comparable diesel and gasoline vehicle pairs. Belzowski 2015. Click to enlarge. |
| Average diesel take rates | ||
|---|---|---|
| Model year | LDV | MDV |
| 2008 | 10% | 63% |
| 2009 | 22% | 59% |
| 2010 | 30% | 59% |
| 2011 | 30% | 62% |
| 2012 | 30% | 61% |
| 2013 | 23% | 62% |
| 2014 | 19% | 63% |
| Data: Polk, 2015 | ||
In addition to holding their value better than gasoline-powered vehicles, diesels incur lower fuel costs—12-27% less for passenger cars and SUVs and 4-8% less for medium-duty pickups over three- and five-year periods.
Although the combined costs of insurance, repairs, maintenance and fees and taxes, are higher for nearly all diesel models, the lower depreciation values and lower fuel costs of diesel vehicles contribute to a lower total cost of ownership—especially among passenger cars and SUVs.
Belzowski says, however, that diesels are not without their challenges, including the potential increase in the cost of diesel fuel compared to gasoline, and the resulting need for diesels to continue to improve their fuel economy to maintain their total-cost-of-ownership advantage.
This is particularly important because both gasoline and diesel-powered vehicles must improve their fuel economy as required by Corporate Average Fuel Economy regulations for 2020 and 2025. But diesel-powered vehicles will continue to provide significant value to their owners through their total-cost-of-ownership advantage over their gasoline-powered counterparts, and they will play an increasingly important role for manufacturers as fuel economy regulations become increasingly strict.
—Bruce Belzowski
Diesel cheaper than regular around here these days (central CA) even with higher taxation, when last I looked. Diesel and gasoline are separate markets with somewhat non-correlated price drivers.
Posted by: Nick Lyons | 09 July 2015 at 01:27 PM
Diesel is typically cheaper in the summer than the winter in the US as it is a similar product as heating oil which has a higher demand in the winter.
Posted by: sd | 09 July 2015 at 03:55 PM
OK, I can see this when you compare a diesel Jetta to a gas Jetta.
I owned a 2006 Jetta TDI for 70,000 miles+, and I enjoyed driving the car. The poor reliability was the only reason I sold it. Even so, the private resale was not horrible. I sold it for 1/2 what I paid for it.
However, if you compare a Prius (a similarly capable car with equal interior room) to the Jetta TDI, I'll bet a dollar, the Prius costs less to own. Not to mention far superior reliability.
Posted by: cujet | 09 July 2015 at 07:15 PM
This is news?
Posted by: ai_vin | 09 July 2015 at 09:28 PM
Lets not forget that these fuels are burned in internal combustion engines that are 20-22% efficient at best, at the flywheel. This means you are tossing away 78-80 cents out of every dollar you spend on the fuel and we been doing this for a hundred years. This has to be the new definition of "stupid."
Don't be diverted from rational thought by nonsense from the fossil fuel industries' propaganda machines.
Posted by: Lad | 09 July 2015 at 09:29 PM
@cujet
Reliability? Toyota? What about all the recalls?
Posted by: Peter_XX | 10 July 2015 at 12:42 AM
"While most new diesel vehicles cost more than their gasoline counterparts—from a few hundred dollars to several thousand—resale values after three years are 30-50% higher for diesel passenger cars and SUVS, and 60-70% higher for diesel medium-duty pickup trucks."
Doesn't this put 3-year resale values at or above the new selling price? Seems unlikely to me.
I know diesel cars typically hold their value better, but not by that much. Ironically, they reason they are more expensive on the used market is that a disproportionally large segment of diesel buyers want to save money by buying used. They pay more to pay less, as it were.
Posted by: Bernard | 10 July 2015 at 04:54 AM
@Bernard
Well, the results from the study are what they are, no matter if you like the results or not.
Posted by: Peter_XX | 10 July 2015 at 07:40 AM
I can see both sides of this argument... the scope is 3-5 years, and includes depreciation into the equation.
That being said, in trucks, diesels are desired for various reasons, so depreciation would be less, and could account for a large percentage of that "cost" advantage.
3-5 years is also a short period of time, modern diesels have an vast amount of very expensive emissions equipment. Small things like DPFs could set owners back 1000s of dollars. High pressure fuel systems found in diesels are notoriously expensive as well... one tank of bad fuel could set you back 1,000s of dollars.
I'll frame this in how and when I would own a diesel. If I had an RV, or a vehicle that would tow more than 30% of the trips I would make. I would not buy a new diesel for an "eco" passenger car. I'd rather hit up a small three banger gasser for that. There are a lot less surprises for a gasser, and a lot less maintenance now a days.
I will give diesels the benefit for being the best for towing, modern torque numbers are pretty extreme.
Posted by: CheeseEater88 | 13 July 2015 at 08:38 PM