to make buying a diesel car worthwhile in an economic sense?
We do around 12K a year and buy used at 2/3 years old and I can't see the virtue on going over to a diesel. I have done a few sums and can't make the diesel car pay its way. higher purchase prices are not ofset by fuel savings unless you keep the car for ten years, which is unlikely
Even buying new the same seems to apply.
So at what point does a diesel make sense - 20k pa?
This is pure economics at work - not driving characteristics...
Thanks for any input
M
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I did a few rough figures and worked out that I would need to do about 25,000pa before it made sense to have a JTD156 vs. 2.0TS 156 as the economy isn't that special. Some cars (VAG are a good example) would need a lower annual mileage before the switch made sense due to the very good economy on many of their diesels, but again they have a much higher residual.
Realistically I wouldn't recommend a diesel to anyone doing under 20k and would suggest they do their sums on specific models if under 25k
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OK - let's try and be a bit more scientific.
Assume the following:
A = Purchase price of petrol equivalent
B = residual of petrol
C = Purchase price of diesel equivalent
D = residual of diesel
Therefore the residual loss (E) = (C-D) - (A-B). If E is positive, then the diesel is a better long term buy from a residual perspective (and vice versa).
Now funding costs because you will either be paying interest on the car (or losing it from your ISA).
Now assume the following:
i = Interest rate for car - depends on personal circumstances (borrowing or using savings), say between 6% to 3%.
x = number of years to keep the car
Therefore the cost of funding (F) = (A-C) * i * x. If F is positive the diesel was cheaper and is costing you less financially.
Finally the cost of fuelling the beast. Assume the following:
Cp = Cost of petrol
Cd = Cost of diesel
Mp = MPG for petrol
Md = MPG for diesel
Ma = Annual mileage
Over the life of your car, the fueling cost differential (G) is G = x * Ma * (Cp/Mp - Cd/Md). If G is positive then diesel was cheaper.
Add together E + F + G to get a total combined cost - again if positive diesel is cheaper and vice versa.
Note - I have assumed insurance, RTF and servicing are the same - if not just multiply the delta by x and add to above.
Phew - now I need a lie down.
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I, on the other hand, wouldn't recommend a petrol to anyone, unless they were buying a 911, Ferrai etc!
Don't forget that most of the 'premium' you pay will be recovered when you sell it on - check out the difference in price between petrol and diesel versions of older cars.
Also in many cases, what looks a direct comparison on paper is not in reality - the diesel engine of equivalent power delivers so much more low down that it is more like driving a petrol engine 1 or 2 'sizes' larger - in this case the price is much more comparable. You pay extra for more power from a bigger petrol, so why not more for a diesel with oodles of torque?
Running a car never makes financial sense. They cost a lot of money, and the difference between petrol and diesel is pretty small compared to the depreciation on a new or nearly new car. However, at 20k a year mine is saving me around £570 in fuel costs, which if I keep if for 3 years (probable) will have more than paid for the car.
But most of all I am keeping almost £500 per year out of Gordon's clutches.....
--
RichardW
Is it illogical? It must be Citroen....
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The residual thing is at risk I read. Diesels always retained their value because there werent many about, now that they have exploded numbers wise, this probably wont last (stands to reason, supply and demand)
Also, check carefully the servicing prices. Ive got an Alfa 156 GTA, and it cost £150 for the 12k mile service. The GF has an Alfa 147 JTD, it will cost £225 for its 12k mile service! (and the GTA needs 6l of 10w60 oil, at about £10 per litre!!)
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I'm not sure the better depreciation arguement is true. I would suggest that going for a used petrol car enables you to go up a marque eg instead of a VW Passat diesel, you can move up to an Audi or Volvo for the same money - if you take the petrol option.
The percieved better marque would hopefully depreciate at the same rate as the Passat, and you would be in a nicer car...
I'm not sure Audi's are better - I just use it as an example...
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Completely agree. Used to hate them but spending a year in Madrid renting new cars each week pushed me onto diesel. The performance is vastly superior.
Just bought a new A4 - having driven several, in my opinion the equivalent to the 1.9TDI (130) is the 1.8T (190) petrol which is more expensive and uses lots more juice. The lesser petrol (FSI or 2.0 regular) just don't have the pull.
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I think you are disagreeing with me - aren't you?
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Of course if everyone used green accounting methods you would calculate for 30% more miles for an equal amount of natural resources. But as that kind of number can't be totted up 'accurately', no-one bothers to try.
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