Diesel Cars: Are They Worth The Extra Expense?

This article was featured in ALG's (Automotive Lease Guide) March/April Newsletter. AGL evaluated the BMW 5-Series diesel.

While diesel fuel is a bit more expensive than gas, and there’s a premium charged for the engine when new, the combination of a great drive experience and better resale should make the decision practically a no-brainer for informed car buyers. The BMW 535d costs $1,500 more than a 535i, and according to the EPA’s (Environmental Protection Agency) calculations the improved fuel efficiency would take around 4 years to break even. But if you decide to sell the car after only 3 years, ALG (Automotive Lease Guide) has forecast in their latest study that the diesel car’s used market premium will be around $2,800, nearly twice the initial cost difference.

And while you’re realizing that cost of ownership advantage, you’re also driving a vehicle that’s torquey and smooth–at a level that diesel owners of the past could never even imagine–and with long-term reliability that’s difficult to match with a gas motor.

So have we finally reached a tipping point in the American market that will make our fleet more closely reflect the high diesel penetration of Europe? There’s evidence both for and against this. While diesel sales are still a relatively small portion of the total market, new buyers are bound to become disciples spreading the word of the powertrain’s benefits. Diesel infrastructure is growing, and while not all stations carry it, it’s now relatively easy to find a diesel station pretty much anywhere in the country. On the other hand, since many luxury buyers tend to lease their vehicles, and the luxury sector is big when it comes to diesel, the resale value aspect may be neutralized, especially when companies are inclined to subsidize gas vehicle leases to get their payments lower than diesel.

While the march of diesel may feel too slow to many of the enthusiasts who have experienced its benefits (it still only accounts for around 1.5% of total sales), the steady introduction of new diesel models suggests that some manufacturers believe the fuel type will be embraced by the market at large, as fuel economy standards go up and more consumers are exposed to diesels. The industry has been waiting for that tipping point, but it has thus far continued to prove elusive.

To access a listing of all of the diesel passenger cars, trucks and crossovers available on the market, click on this link: http://www.fueleconomy.gov/feg/diesels.jsp.