Study Shows Hybrids and Diesels Retain More Value Over Time

A new Carnegie Mellon University study released last week reveals that hybrid and diesel-engine vehicles are a better value compared to vehicles with gasoline engines.

The economics of hybrids and diesels are commonly evaluated based on their purchase price—on average higher than comparable gas-powered cars—compared to savings on fuel during their use. Retention of value—in terms of higher resale value—can skew the economic benefits in favor of alternative fuel-efficient cars, such as hybrid, diesels and electric cars.

The Carnegie Mellon researchers compared the Volkswagen Jetta TDI with the Jetta 5C and 4C; the Toyota Prius with the standard Toyota Camry sedan; the Honda Hybrid Civic with the conventional Civic; and the Mercedes-Benz E320 diesel with the E350.

The Jetta TDI and Toyota Prius came away as clear winners in terms of retaining a greater percentage of their initial purchase price. The study was underwritten by Bosch, a leading manufacturer of diesel technology, and was conducted by researchers at CMU’s Tepper School of Business. Researchers used auction data—provided by Manheim Auctions, a wholesale vehicle operator—for vehicles sold after three years of ownership.

Bosch obviously wanted third-party validation that clean diesel cars are a smart consumer choice. But the study also confirmed that hybrids, like the Prius, provide a similar resale benefit. This was especially true in summer 2008, when gas prices spiked. It was also true—although to a lesser degree—when fuel prices dropped in 2009.

Gas and diesel prices are on the rise again in 2011, and are forecast to continue climbing in the coming years. This trend supports the economic argument that fuel efficiency is a desirable vehicle feature that will retain its value for today’s car buyers.