The Payback on Diesels

published 9 July 2009

Would you brew a cup of joe with a filter that spent time on a tailpipe? I wouldn’t either, but that’s the premise of a video on Volkswagen’s blog “TDI Truth & Dare.” A snowy-white coffee filter attached to a 2009 Touareg 2 TDI (turbocharged direct injection) diesel’s backside remains pristine, while a filter that’s connected to an old diesel model turns black. The message: Diesel isn’t dirty anymore.

Gasoline-electric hybrids -- and the soon-to-come plug-in hybrids -- still get most of the green ink, but clean diesels are vying for environmental street cred of their own. What skeptics may not know is that unlike the smoky, noisy diesels of the early ‘80s, today’s diesels are as clean as gasoline engines. The emissions rules that took effect two years ago forced manufacturers to retool their diesels to reduce smog-forming nitrogen oxides and soot. The new 2009 models meet California’s strict emissions standards and can be sold in all 50 states. In fact, diesels emit about 20% less carbon dioxide than gasoline engines do. And because diesel engines don’t have to be as large as gas engines to generate the same power, diesels are up to 40% more fuel-efficient.

The Price is Almost Right.

To boost sales, diesels have to overcome more than an image problem. You’ll pay more for a diesel model than its gasoline-engine sibling, mostly because of the complex antipollution hardware and limited sales in the U.S. The premium ranges from $1,500 on Mercedes-Benz’s M-Class and R-Class diesels to $4,000 on the Audi Q7 TDI. The seven-seat Mercedes GL320 BlueTEC is a rarity – it’s $1,000 cheaper than the gas-engine model.

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Until recently, diesel fuel cost more than gasoline. But in early June, the national average price for a gallon of diesel was almost 20 cents less than for regular gasoline. If you hold on to a diesel vehicle for five years (the typical ownership period), with diesel cheaper than gasoline, you’ll likely recoup the extra cost of the vehicle with savings at the fuel pump. Plus, tax credits are available for diesels; credits for the 2009 models range from $900 to $1,800.

Testing The New Models.

Other than heavy-duty trucks, all diesels currently for sale in the U.S. are made by German car companies, which already sell large numbers of diesels throughout the world. The lineup consists mostly of SUVs, but more sedans are coming. Mercedes-Benz’s 2010 E350 BlueTEC will arrive next March, and an Acura TSX diesel is in the works.

I put three all-new diesel models through their paces and then applied the Kiplinger’s value test. Other than labeling and a different feel as you accelerate, you’d be hard-pressed to tell the difference between the diesel and the gasoline model.

The sticker price of the BMW 335d is $44,725, or $1,700 more than the gasoline-engine 335i. The 335d’s 425 pound-feet of torque (compared with the gas engine’s 300) sent me screeching off the line. But even with aggressive driving, I easily achieved the Environmental Protection Agency rating of 27 miles per gallon in combined city and highway driving. If you drive 15,000 miles a year at current fuel prices, you’ll save $755 annually compared with the gas-engine 335i. A $900 tax credit also helps. The BMW X5 xDrive35d got just over 28 mpg on a road trip, beating the EPA highway rating of 26 mpg (city is listed as 19 mpg). You could save $643 a year in fuel costs over the gasoline-engine X5 30i, and there’s a $1,800 tax credit. But the sticker price of $52,025 carries a premium of $3,700 over the already pricey X5 30i.

When you see numbers like 30 mpg city and 41 mpg highway, you probably think “hybrid.” But that’s the fuel economy of the Volkswagen Jetta TDI, the only diesel in the bunch that isn’t in the luxury price range. The Jetta TDI starts at an easy-to-take $22,270. The premium over the gas-engine Jetta SE is $2,175, but you get a $1,300 tax credit and would spend $525 a year less on fuel than with the Jetta SE.

Anderson has been with Kiplinger since January 2004, when she joined the staff as a reporter. Since then, she's covered the gamut of personal finance issues—from mortgages and credit to spending wisely—and she heads up Kiplinger's annual automotive rankings. She holds a BA in journalism and mass communication from the University of North Carolina at Chapel Hill. She was the 2012 president of the Washington Automotive Press Association and serves on its board of directors. In 2014, she was selected for the North American Car and Truck Of the Year jury. The awards, presented at the Detroit Auto Show, have come to be regarded as the most prestigious of their kind in the U.S. because they involve no commercial tie-ins. The jury is composed of nationally recognized journalists from across the U.S. and Canada, who are selected on the basis of audience reach, experience, expertise, product knowledge, and reputation in the automotive community.