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News and Reviews

Going diesel-powered a long-term decision


By ALEX LAW
Thursday, April 15, 2004 - Page G22

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Implicit in every marketing effort associated with diesel-powered cars is the notion that they will save you money in comparison with a traditional gasoline-powered vehicle.

This is a particularly popular card for marketers to play when gas prices are rising quickly enough to attract the attention of buyers and the media, as they are now.

People trying to encourage outrage over the cost of fuel count on the chronic inability of car owners to remember that, when you allow for the effects of inflation, gas has often been more expensive than it is now.

Just as important, we almost never consider the situation from the perspective of the number of kilometres you get for a dollar, which improves regularly thanks to various technical improvements in new cars.

Take into account the relative cost of fuel in constant dollars and the regular improvements to fuel economy levels, and it probably costs less to go a kilometre now than at any time in our history. And we get to travel more safely and more comfortably in cars with much higher quality, but that's another story.

Before we go into the economics of diesel-powered vehicles, a few words on their general condition. Simply put, they are vastly improved from 25 years ago, when they first started showing up to help people deal with the gas shortage scare of the late 1970s. In terms of power and refinement and virtually everything else, they are the equal of gasoline-powered vehicles.

This reality actually plays a role in considering the economic case for a diesel, since it's likely easier to hang on to an enjoyable product, and hanging on to a diesel is critical to making it pay off.

Cars with diesel engines are always more expensive than the same package (as represented by a trim level) with a gasoline engine, a situation car companies ascribe to the extra costs associated with producing diesels.

Right now Volkswagen is the primary purveyor of diesel-powered cars, and the Detroit-based distributor of vehicles built in Germany and Mexico charges extra for them. (We can expect DaimlerChrysler to do the same later this year when it launches diesel versions of its Mercedes-Benz E-class sedan and Jeep Liberty sport utility.)

A VW Golf in the GL trim with a 2-litre inline-four gasoline engine costs $20,230, while a GL with a 1.9-litre inline-four diesel engine costs $22,290. The same model in a GLS trim is $23,010 with gasoline and $24,720 with diesel.

A Beetle GLS is $23,690 with a gas engine, and $25,470 with a diesel. A Jetta GLS sedan is $24,520 and $26,080 with gas and diesel, respectively, while a Jetta wagon is $25,970 with a gas engine and $27,550 with a diesel.

That works out to diesel premiums of $2,060 for the Golf GL, $1,710 for a Golf GLS, $1,780 for a Beetle GLS, $1,560 for a Jetta GLS sedan, and $1,580 for a Jetta GLS wagon.

That's a lot of money to earn back on the difference between the price of a litre of gasoline and a litre of diesel fuel.

On that point, the price difference between gasoline and diesel varies from day to day and region to region, a situation that is closely watched by MJ Ervin & Associates, a Calgary firm that specializes in petroleum marketing.

According to the firm's website at http://www.mjervin.com, on April 6 the average price across Canada for a litre of regular gasoline was 74.3 cents, while a litre of diesel was 70.6 cents.

If you use those numbers to work out the annual costs of operating gasoline or diesel versions of the Golf GL, the importance of putting a lot of distance on the diesel car becomes clear.

On the Transport Canada fuel economy test cycle, the Golf GL with a gasoline engine uses 9.8 litres of gasoline to go 100 km in the city and 6.2 litres to go 100 km on the highway, while the Golf GL with a diesel uses 7.0 and 4.6 litres in the same conditions.

Using the Transport Canada numbers, if you drive half the time in the city and half the time on the highway, you need 1,680 litres (980 in the city and 700 on the highway) of gasoline or 1,080 litres (620 in the city and 460 on the highway) of diesel to go 20,000 km.

Taking MJ Ervin's April 6 average fuel costs, that translates to $1,226.40 for 20,000 km in a gasoline Golf GL and $762.48 in a diesel version of the same car, which is a difference of $463.92.

To recover the $2,060 premium for the Golf GL using those calculations, that means you will have to drive the car about 88,800 km, which would take the average driver about 4.5 years.

After that, of course, you would start to save that $463.92 a year, so the longer you drive a Golf GL diesel the better a deal it is.

This assumes, of course, that you actually agree to pay the sticker premium for the diesel version of a Golf, Jetta, Mercedes, Jeep or whatever. You can always try to bargain the dealer into a lower price for that particular feature.

All of these calculations are generalized, since actual fuel economy levels will vary from person to person and regional costs will change and diesel fuel could become more expensive if more people start buying it. But they do tend to give a reasonable evaluation of the current situation.

One benefit to owning a diesel vehicle that will never go away involves the amount of time required for refuelling. Better fuel economy means better range (the distance your vehicle will go on a tank of fuel) and better range means many fewer visits to the gas station.

The VW Golf has a 55-litre tank, so you would need to refuel it about 20 times to put in 1,080 litres of diesel fuel a year, versus about 30 times for the 1,680 litres of gasoline you'd need.

Not having to stop for fuel so often is the kind of math anyone can understand and appreciate.








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