UMTRI study finds US diesel vehicles generally have lower total cost of ownership than gasoline vehicles
28 June 2013
|TCO for selected gas and diesel vehicles over a 3 year timeframe. Source: UMTRI. Click to enlarge.|
Diesel vehicles generally saved owners between $2,000 to $6,000 in total ownership costs during a three to five year period when compared to similar gasoline vehicles, according to data compiled by the University of Michigan Transportation Research Institute (UMTRI). The study—Total Cost of Ownership: A Gas Versus Diesel Comparison—was conducted for Robert Bosch LLC; the results were released at the 2013 Alternative Clean Transportation Expo in Washington DC.
The report reviewed the role diesel vehicles play in the current vehicle fleet by analyzing the Total Cost of Ownership (TCO) for clean diesel vehicles and comparing their TCO to their gas vehicle counterparts. The UMTRI researchers—Bruce M. Belzowski and Paul Green—built the TCO model by developing three and five year cost estimates of depreciation by modeling used vehicle auction data and fuel costs by modeling government data.
They combined these estimates with three and five year estimates for repairs, fees and taxes, insurance, and maintenance from an outside data source. The results showed that advanced diesel vehicles generally provide a return on investment in both the three and five year timeframes, although there are differences in the amounts of return among mass-market vehicles, medium-duty trucks, and luxury vehicles.
Overall, the results of our analyses show that diesel vehicles provide owners with a TCO that is less than that of the gas versions of the same vehicles. The estimates of savings for three and five years of ownership vary from a low of $67 in three years to a high of $15,619 in five years, but most of the savings are in the $2,000 to $6,000 range, which also include the extra cost that is usually added to the diesel version of a vehicle. Though there are some exceptions to these positive results for some of the diesel versions of vehicles from a TCO perspective, the overall direction of the results support the idea that diesel vehicles compete well within the US market. In particular, the idea that one can get a return on one’s initial higher investment in a diesel vehicle within three years is a very positive sign, considering that new vehicle buyers tend to keep their new vehicles for an average of three to five years.
Some continuing challenges for diesels in the US include the potential increase in the cost of diesel fuel compared to gasoline, and the resulting need for diesels to proportionally improve their fuel economy to maintain a TCO 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 2016 and 2025.
As the market for diesels increases as more diesel powered vehicles are introduced into the market (diesel variants of the Chevrolet Cruze, Jeep Grand Cherokee, Ram 1500, and Ram ProMaster have recently been announced and will be the first American-branded, light duty diesel vehicles) the premium that diesels carry in the marketplace today may decrease through the sheer number of competing models. But the increased number of diesel models in the fleet may also bring down the price of diesel powered vehicles, providing consumers with both price and fuel savings. Diesel powered vehicles are providing significant value to their owners through their TCO advantage over their gas powered counterparts, and they will play an increasingly important role for manufacturers and consumers as fuel economy regulations becoming increasingly strict.—“Total Cost of Ownership”
Highlights from the diesel-gasoline comparisons include:
Total Cost of Ownership. In the three-year timeframe comparison, diesel vehicles in the mass market passenger car segment are estimated to save owners significant money, with the VW Jetta owner saving $3,128, the VW Jetta Sportwagen owner saving $3,389, and the VW Golf owner saving an estimated $5,013.
In the luxury segment, all the diesel versions of the Mercedes-Benz E Class ($4,175), Mercedes-Benz GL Class ($13,514), Mercedes-Benz M Class ($3,063), Mercedes-Benz R Class ($5,951) and VW Touareg ($7,819) save owners money in the three-year timeframe.
Fuel Efficiency. All of the diesel vehicles had better miles per gallon than the gasoline versions with the diesels having between 8 to 44 percent higher miles per gallon.
Fuel Costs. All of the diesel vehicles had lower fuel costs than all the gas versions of comparable vehicles, with 11 of the 12 vehicles showing double digit reductions in fuel costs, ranging from 10 to 29%. Similar to the three-year comparisons, five-year estimated fuel costs for diesel vehicles are less than those of comparable gas versions. The percentage difference in terms of the reduction from gas to diesel costs decreased for some diesel-gas comparisons as diesel prices began to increase around the 2005 timeframe.
Depreciation. 11 of the 12 diesel vehicles held their value better than comparable gas vehicles over the three year timeframe with eight vehicles showing double digit percentage savings ranging from 17% up to 46%. 9 of the 10 diesel vehicles hold their value better than comparable gas vehicles over the five-year timeframe, with five vehicles showing double digit percentage savings ranging from 10% up to 39%.
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