UMTRI study finds total cost of ownership of diesels in US often much less than gasoline counterparts
A comprehensive study of the total cost of ownership (TCO) of light- and medium-duty diesel passenger vehicles in the US has 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.
Bruce Belzowski, managing director of the U-M Transportation Research Institute's Automotive Futures group, compared thousands of gasoline and diesel versions of the same or nearly identical vehicles sold at auction in 2012-13, including Audi, BMW, Mercedes-Benz and Volkswagen passenger cars and SUVs, and Chevrolet, Ram, Ford and GMC medium-duty pickup trucks.
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. In particular, the idea that buyers can get a return on their initial higher investment in a diesel vehicle within three years is a very positive sign, considering new buyers tend to own their vehicles for an average of three-to-five years.—Bruce Belzowski
|Alternative powertrain sales|
|Sales of light-duty vehicles with alternative powertrains in 2014 was a mix of increases and decreases over 2013 sales.|
|While alternative powertrains still represent a small percentage of market share compared to gasoline engines, the report noted, clean diesels saw a 10% increase in 2014 sales over 2013 sales, while hybrids saw a 10% decrease, pure electrics saw a 20% increase and compressed natural gas saw a 33% decrease.|
The report—Total Cost of Ownership: A Diesel Versus Gasoline Comparison (2012-2013)—was underwritten by Robert Bosch LLC. Data was provided by Manheim Auctions, Vincentric, Black Book, Environmental Protection Agency, National Highway Traffic Safety Administration, Bureau of Labor Statistics, Energy Information Administration and Federal Highway Administration.
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 30-50% higher for diesel passenger cars and SUVS, and 60-70% higher for diesel medium-duty pickup trucks. The percentages are even higher after five years of ownership.
|Percentage differences in miles per gallon (mpg) between comparable diesel and gasoline vehicle pairs. Belzowski 2015. Click to enlarge.|
|Average diesel take rates|
|Data: Polk, 2015|
In addition to holding their value better than gasoline-powered vehicles, diesels incur lower fuel costs—12-27% less for passenger cars and SUVs and 4-8% less for medium-duty pickups over three- and five-year periods.
Although the combined costs of insurance, repairs, maintenance and fees and taxes, are higher for nearly all diesel models, the lower depreciation values and lower fuel costs of diesel vehicles contribute to a lower total cost of ownership—especially among passenger cars and SUVs.
Belzowski says, however, that diesels are not without their challenges, 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 regulations for 2020 and 2025. 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.—Bruce Belzowski