Is diesel really the cheaper alternative?

Posted on: 24 November 2009 by Mark O'haire

Diesel enthusiasts have long maintained that their form of motoring is good for their wallet and for the planet. But recent research reveals that it could take them decades to reap the financial benefits.

For a while diesel has traditionally been seen as the cheaper alternative - giving many more miles to the gallon - it now costs on average 12p per litre more than petrol.

That, combined with the extra cost of the initial car purchase, means it can take years of driving in some models for the switch to make economic sense.

The research by car experts Parker's shows that choosing, for example, a BMW 318 diesel could take 28 years to recoup the extra cost of the diesel car over an equivalent version powered by petrol.

Even in a diesel Mini, it could take the driver six to seven years to break even. A Ford Mondeo diesel could take almost as long, at around six years.

Diesel has undergone a transformation in recent years. It was once thought dirty, smelly and suitable only for lorries and other commercial vehicles. But as technology delivered quieter, more refined engines, and because diesel can be up to 30% more fuel efficient than petrol and emits less carbon dioxide, it has grown in popularity.

More than half the new cars sold in the UK are now diesel. The trend has been encouraged by the Government's road tax policy. Because diesels emit less CO2, they sit in lower tax bands which are now graded according to how much a car pollutes.

Until the mid-1990s it had even more benefits - it was also cheaper at the pumps. However, massive worldwide demand coupled with a shortage of diesel refineries mean the price has overtaken that of petrol, and the financial benefits have begun to erode.

Ray Holloway of the Petrol Retailers' Association says, “Throughout my life until the mid-1990s diesel was always up to 3p a litre cheaper than petrol. Now the roles are reversed.”

While Britain's big four supermarkets have recently cut diesel prices to 97.9p per litre, petrol can be found for 85.9p per litre on some forecourts. A diesel car costs on average £1,400 more than its petrol equivalent.

One of the reasons for this is that diesel engines will often be turbocharged - unlike most petrol engines - and need a filter to capture the soot particles in the exhaust.

This puts up the cost of the engine and the saleroom price. And while diesel cars have traditionally held their value better than petrol ones, because they are now more common that is no longer such a major factor.

A Parker's spokesman says, “In the trade the premium for diesel small used cars has all but disappeared, and on mid-size cars it's about £400.”

Experts at Parker's have added a cost calculator facility to their website to help drivers find out how far they need to drive a diesel to reap the benefit.

The spokesman added, “In Europe the tax on diesel is traditionally much lower so that buying diesel makes more sense. But in the UK, though the Government says it wants us to move towards a low carbon economy it has never favoured diesel in tax terms. There is an inconsistency there.”

AA president Edmund King also backed the research.

“Buying a diesel is not an automatic switch to cut-price motoring. For many low-mileage drivers, buying a diesel is a false economy.

“We urge anyone considering the switch to diesel to research their motoring costs thoroughly, including start-up costs, fuel efficiency, tax disc band, annual mileage - and leeway in their calculations for petrol-diesel price changes.”

Where do you stand on the diesel/ petrol debate?


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