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Even with a more expensive sticker price, a new analysis shows diesel vehicles can save their owners thousands of dollars over several years when compared side-by-side with a similar gasoline-powered model.
Bruce Belzowski, the managing director of the University of Michigan Transportation Research Institute’s (UMTRI) Automotive Futures group, studied the total cost of diesel vehicle ownership and published his findings in a new report. Comparing similar diesel and gasoline vehicles sold at auction between 2012 to 2013, he included fuel costs, insurance and maintenance expenses in his analysis.
Drivers save as much as $7,000 overall with a new diesel, concluded Belzowski, in comparison to a similar gasoline-powered model. Cost savings were mainly driven by two factors: lower vehicle depreciation and less expensive fuel.
“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,” Belzowski reported.
Diesel vehicles have significantly lower fuel costs, said Belzowski, which offsets higher maintenance and other ownership expenses. Passenger cars and SUVs see the highest savings (12 to 27 percent over gasoline models), while medium-duty trucks cost 4 to 8 percent less at the fuel pump. Fuel expenses were calculated for ownership periods of three to five years.
“Diesels are not without their challenges,” noted UMTRI, “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 [CAFE] regulations for 2020 and 2025,” said Belzowski. “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.”
Cost of Ownership
Belzowski “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,” reported UMTRI.
When fuel costs are removed from the equation, though, the results lean a different direction. Gasoline vehicles tend to have cheaper fees, taxes, maintenance, repairs and insurance, according to the report.
“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,” Belzowski said.
Higher Resale Value
The other source of significant cost savings for diesels stems from lower depreciation rates.
“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 to 50 percent higher for diesel passenger cars and SUVS, and 60 to 70 percent higher for diesel medium-duty pickup trucks,” UMTRI reported. “The percentages are even higher after five years of ownership.”
This factor is especially important, noted Belzowski, because buyers tend to sell a new vehicle three to five years after it was purchased new.