The diesel car is becoming a firm favourite with British drivers.
Ten years ago about one in five new cars bought was a diesel. Last month the figure was 53.9%.
Why the big shift? With the price of fuel seemingly rising by the day, many of us believe that filling up on diesel instead of unleaded petrol will save us money.
But will it? Here’s what to consider if you’re in the market for a new car.
Why diesel cars are more expensive to buy
If you are looking to buy a new car, the diesel version will usually cost you more than the petrol one. There are a few reasons behind this, say motor manufacturers.
The main one is that the engines have to be stronger, because diesel explodes more violently than petrol in the engine cylinders. This makes the engines heavier, so things like engine mounts and suspension need to be stronger and more expensive too.
Throw in things like turbochargers and emission control systems, and the difference between petrol and diesel models can easily run to over £1,000 for most cars.
So what about the fuel? Well, it’s more expensive too. Once upon a time, diesel was actually cheaper than petrol (as you can see on the chart below). Today it’s about 7p per litre more expensive than petrol.
I’ll admit, I struggle to see why the gap is so big. Diesel needs less refining than petrol and uses less crude oil, although the move to low sulphur diesel fuels has added some complexity and cost to the refining process.
Fuel duty cannot explain the difference either. Both diesel and petrol are subject to the same duty of 57.95p per litre. Could it be something to do with a shortage of diesel refining capacity in the UK?
Whatever the case, on the upside, diesel cars do more miles per gallon, have lower road tax costs (due to lower emissions – they’re ‘greener’) and hold their value better than petrol cars.
So is our enthusiasm for diesel cars justified or misplaced? It depends…
Diesel or petrol? Here’s how to decide
I’ve taken three different types of car. A Fiat 500 (small), a VW Golf (medium) and a Ford Mondeo (large). I’ve then estimated the annual running costs for comparable petrol and diesel versions, based on buying a brand new car and holding it for three years.
There is no right way to do this. Some calculations are open to different interpretations (for example, residual values at different mileage rates). But the methodology has been applied consistently to each car.
Here’s how I’ve worked out the costs: by far the biggest cost in running a car is depreciation – the loss in value each year. I’ve taken the list price of the car (most sensible buyers don’t pay this) and taken away its estimated value after three years (source: Whatcar.com), then divided by three to get an average annual cost. (Note depreciation is usually highest in the first year of ownership)
Vehicle Excise Duty (VED) costs are pretty straightforward (the data comes from the DVLA) although some cars have zero tax costs in the first year. Typical insurance costs have been taken from motoring websites.
Servicing costs are interesting. It has been claimed by some that diesels cost more to service. I’m not sure this is true. Having consulted my brother-in-law mechanic who has his own garage, he points out that some diesel filters are changed more frequently, but that diesel cars don’t have spark plugs which cost more to replace. It is therefore assumed that there is no difference in servicing costs.
Finally, we come to fuel costs. I’ve taken UK average petrol and diesel prices from petrolprices.com. The prices per litres are then multiplied by 4.545 to get the cost per gallon.
A key area of controversy is fuel efficiency – how many miles do you get for each gallon of fuel or mpg? Car manufacturers give official mpg figures but most of these bear no resemblance to reality, because the figures are based on controlled rather than actual driving conditions.
While trawling the internet, I found a site (www.honestjohn.co.uk/realmpg/) which compiles data on what mpg levels drivers actually achieve for each make of car. I have used these estimates instead.
So let’s have a look at the results.
Fiat 500: Petrol is better than diesel
| Fiat 500 petrol vs diesel | Diesel | Petrol |
|---|---|---|
| Engine size | 1.3 | 1.2 |
| Cost | £13,760 | £11,360 |
| % value retained after 3 yrs | 41% | 43% |
| Value after three years | £5,641.60 | £4,884.80 |
| Annual depreciation first 3 yrs | £2,706 | £2,158 |
| Tax band | B | C |
| VED cost per year | £20 | £30 |
| Typical Insurance | £501 | £338 |
| Average mpg* | 59.3 | 49.6 |
| Fuel price per litre | 145.6 | 138.6 |
| Fuel price per gallon | 661.752 | 629.937 |
| Mileage per year | 10,000 | 10,000 |
| Fuel used (gallons) | 168.63 | 201.61 |
| Fuel cost | £1,116 | £1,270 |
| Total running costs | Diesel | Petrol |
| Depreciation | £2,706 | £2,158 |
| Tax | £20 | £30 |
| Insurance | £501 | £338 |
| Fuel | £1,116 | £1,270 |
| Servicing | £175 | £175 |
| Annual running cost | £4,518 | £3,971 |
The high initial cost of the diesel and as a result, the depreciation, means that running the 1.2 litre petrol version for 10,000 miles per year is much cheaper. It is still much cheaper at 15,000 miles per year.
VW Golf Match: Diesel is better than petrol
| VW Golf petrol vs diesel | Diesel | Petrol |
|---|---|---|
| Engine size | 2.0 | 1.4 |
| Cost | £21,105 | £19,115 |
| % value retained after 3 yrs | 45% | 40% |
| Value after 3 yrs | £9,497.25 | £7,646.00 |
| Annual depreciation first 3 yrs | £3,869 | £3,823 |
| Tax band | D | F |
| VED cost per year | £63 | £130 |
| Typical insurance | £618 | £545 |
| Average mpg* | 53.7 | 42.7 |
| Fuel price per litre | 145.6 | 138.6 |
| Fuel price per gallon | 661.8 | 629.9 |
| Mileage per year | 10,000 | 10,000 |
| Fuel Used (gallons) | 186.22 | 234.19 |
| Fuel cost | £1,232 | £1,475 |
| Total running costs: | Diesel | Petrol |
| Depreciation | £3,869 | £3,823 |
| Tax | £63 | £130 |
| Insurance | £618 | £545 |
| Fuel | £1,232 | £1,475 |
| Servicing | £175 | £175 |
| Annual running cost | £5,958 | £6,148 |
Here I’ve compared the 2.0 TDI with the frugal 1.4 TSI. At 10,000 miles per year, the diesel costs £190 less to run than the petrol. At 15,000 miles, the diesel is £311 per year cheaper.
Ford Mondeo 2.0 Zetec: High mileage is needed to justify the diesel
| Ford Mondeo petrol vs diesel | Diesel | Petrol |
|---|---|---|
| Engine size | 2.0 | 2.0 |
| Cost | £20,895 | £19,095 |
| % value retained after 3 yrs | 37% | 36% |
| Value after 3 yrs | £7,731.15 | £6,874.20 |
| Annual depreciation first 3 yrs | £4,388 | £4,074 |
| Tax band | E | I |
| VED cost per year | £115 | £245 |
| Typical insurance | £580 | £338 |
| Average mpg* | 45.1 | 33 |
| Fuel price per litre | 145.6 | 138.6 |
| Fuel price per gallon | 661.8 | 629.9 |
| Mileage per year | 10,000 | 10,000 |
| Fuel used (gallons) | 221.73 | 303.03 |
| Fuel cost | £1,467 | £1,909 |
| Total running costs | Diesel | Petrol |
| Depreciation | £4,388 | £4,074 |
| Tax | £115 | £245 |
| Insurance | £580 | £338 |
| Fuel | £1,467 | £1,909 |
| Servicing | £175 | £175 |
| Annual running cost | £6,725 | £6,741 |
At 10,000 miles per year there is little to choose between the petrol and diesel versions. At 15,000 miles per year, the diesel version is £236 per year cheaper.
So what does this all mean?
The difference between the petrol and the diesel prices means that the benefits of owning a diesel are not as clear-cut as they used to be. Arguably, it’s probably not something to spend a lot of time agonising about before you buy.
You need to drive a lot of miles to make big cost savings. How and where you drive (motorways or around town) also makes a big difference. Different makes and types of cars (big or small) are also important. Any further increase in the spread between petrol and diesel prices is going to make the buying decision even more marginal.
The other thing that is very clear is: don’t buy a brand new car. The depreciation rates are horrendous. A three-year-old car is going to save you a lot of money, regardless of its fuel type.
That just leaves us to workout why the price of diesel fuel is much more than petrol. Being a diesel car owner and a bit of a cynic, I can’t help feeling that something doesn’t stack up here.