The Diesel Advantage

With all the concern accompanying the possibility of a war in the
mid-east as well as the constantly increasing number of large
and thirsty SUVs on our roads, there has been a great deal of
talk about the pros and cons of diesel-powered vehicles for the
US market. Any of you who have traveled in Europe know that a
large percentage of vehicles sold there are diesels. Yet in the
US, the percentage is miniscule. In fact, the only diesel-powered
cars that have been sold here in recent years are the Mercedes
E320D and the VW Jetta TDI, New Beetle TDI, and Golf TDI, and
each amounts to only a small percentage of their model’s total
production. Why is it that most of us are so resistant to the
idea of driving diesel passenger cars, especially when they make
so much economic sense and could help us decrease dependence on
foreign oil?

It would be easy to say that the reason we buy so few diesels
here is that they offer so few. But that would be
counter-intuitive to what seems to be a basic credo of the
American marketplace: if there is a demand for something,
it will show up. The fact is, diesels have never sold well
here, and those who drive them have always been looked at
as a little odd. Perhaps we still view them as the noisy,
smelly, slow vehicles they once were. Perhaps as the highly
unreliable power sources that proliferated during the gas
crisis of the 1970s. That would certainly be reason enough
to explain the lack of demand for them. But current diesel
technology is such that the old stereotypes just don’t apply.
Diesels are no longer particularly noisy, smelly, or slow
and are known for their reliability.

Another commonly heard argument against diesels is that diesel
fuel costs more and is hard to find. True, diesel fuel does
generally cost more in most parts of the country, but not
nearly enough more to overcome the fuel efficiency advantage
of diesel engines. If you average city and highway estimated
miles per gallon figures, a 1999 Jetta 2.0 liter gas engine
with an automatic transmission rates at 25 miles per gallon
while a 1.9 liter diesel engine rates at 39.5 miles per gallon.
If we were to use a figure of $1.50/gallon for regular gas
vs. $1.70/gallon for diesel, fuel cost would be 6 cents per
mile for the gasoline engine Jetta ($1.50 divided by 25 mpg)
and $4.3 cents per mile for the diesel ($1.70 divided by 39.5
mpg). You can see that even with a significant difference in
the cost of diesel fuel, the diesel still has a significant
advantage in fuel economy. For Mercedes, this advantage is
less of a factor and using the $1.50 vs. $1.70 difference in
fuel cost, a 1999 E320 diesel has a ½ cent per gallon advantage
over the gas car. As far as diesel fuel being hard to find,
that is certainly not true in most parts of the country. Our
trucking industry is primarily diesel fueled, so diesel is
readily available almost anywhere.

Another significant cost advantage of diesels, and the primary
reason for our interest in this topic, is the generally high
resale value of diesels vs. gas. Because of the relatively
short supply of used diesels and the high demand for them when
they do reach the used market, diesels bring a premium. This
is a huge advantage for the Mercedes. When new in 1999 a
comparably equipped diesel E320 cost about $2100 less than the
gas car. If you were to trade-in that vehicle today, Galves
would rate the diesel at $3100 more than the gas car that cost
$2100 more when new, for a total advantage of $5200. Although
VW diesel products have a significantly higher resale value
than their gas counterparts, the diesels cost more new and
whatever advantage they have on the used market is
counterbalanced by their higher cost when new. Generally
speaking, diesel cars are much easier to sell when used and
can withstand the effects of higher mileage on their value much
better than gas vehicles.

Frankly, it took a long time for the other priceguides to
recognize
the fact that as used vehicles some of these diesels were worth
more than their gas counterparts even though they cost less new.
One of the major books still rates the Mercedes E320 diesel for
significantly less than the gas car!

The bottom line is, we are fans of the modern diesels and think
there are good reasons more people ought to put them on their
list of contenders when they are thinking of buying a car. They
are clearly more economical and their higher resale value makes
up for whatever price disadvantage they might have when new.
They are no longer particularly noisy or smoky. Turbo-chargers
have brought them up to speed in the acceleration department.
They are generally less expensive to maintain and have always
had a reputation for being durable. What’s not to like?
Hopefully, more manufacturers will bring them to the marketplace
and consumers will have more options to choose from.

Dan Galves