Volkswagen Jetta TDI

The economics of the Volkswagen Jetta TDI is a complicated calculus of purchase price, fuel costs, and government incentives.

Let’s assume that you are comparing the Jetta TDI with the only other cars breaking the 40-mpg mark on the highway—the Toyota Prius and the Honda Civic Hybrid. All three carry a base MSRP of about $21,000. (The SportWagen is slightly more expensive.) The biggest cost factor will be the trim level. Sure, the stripped down Prius is a couple of hundred dollars cheaper than the Jetta TDI and Civic, but the out-the-door price can quickly ramp-up to $30,000 for a fully loaded Prius package. In addition, red-hot demand and lack of supply of the Prius leaves little bargaining power to the shopper—and often long waiting lists. On the other hand, you’ll have an easier time keeping the final cost of the Civic Hybrid and Jetta TDI in the low- to mid-$20,000 range—and drive off the lot today.

All three vehicles qualified for federal tax credits, but—thanks to the 60,000 cap for each individual carmaker—the credits are either completely gone in the case of Toyota or vanishing fast for Honda hybrids. On the other hand, buying the Volkswagen Jetta TDI could put $1,300 back in your pocket during the next tax season. (Watch out for the Alternative Minimum Tax, which could strip you of any credit.)

And then, there’s the cost of fuel. Diesel fuel has been consistently running 50 or 60 cents more per gallon. If you drive 15,000 miles per year—and can manage 40 miles to the gallon in these vehicles—your diesel fuel bill will run about $200 per year more than the hybrids using gasoline. In other words, the VW tax credit will essentially cover the extra fuel expenses during an average period ownership.

One final thing to consider: Volkswagen has been criticized in recent years for unreliable electronics and higher costs for maintenance. Toyota's stellar quality record is not as high as it once was, but both Toyota and Honda maintain excellent rankings for quality and reliability.

Punch all those numbers into the calculator, and it’s just about washout for the three vehicles. You’re back to the more fundamental questions about which vehicle best serves your needs, the styling that meets your fancy, and your stance about diesel’s durability and performance versus the hybrids’ very low emissions and cool gas-electric technology.