Fuel wars: Diesel or Petrol?

So Parkers took two similar, popular cars – one petrol and one diesel Ford Mondeo – and calculated how much they would cost to run over five years. We took road tax, depreciation, fuel, servicing and insurance costs into account – and the results are rather surprising…

Road tax

Whereas the Ford Mondeo 1.8 TDCi Zetec emits 149 g/km CO2 and falls into road tax band C, the Mondeo 1.6 Zetec has CO2 emissions of 177 g/km and is therefore in tax band E.

Which tax band is your car in?

This means cheaper road tax for the 1.8-litre TDCi now, next year and in 2010. It is fairly unaffected by the 2009 road tax changes and costs will only increase by £5 in 2010. On the other hand, owners of the 1.6-litre petrol must pay £35 more next year, followed by another £5 rise the year after.

This equates to road tax costs of £1005 and £615 for the petrol and diesel models, respectively – a £390 difference in favour of the low-emission TDCi.

	Petrol	Diesel
2008	£170	£120
2009	£205	£120
2010	£210	£125
2011	£210	£125
2012	£210	£125
Five year total:	£1005	£615

 

Road tax is £390 cheaper for the 1.8 TDCi over five years.

Depreciation

Generally, a diesel model tends to cost more from new than a same-sized petrol equivalent. This is the case for the Ford Mondeo.

A new 1.6-litre petrol is £1150 cheaper, with the diesel costing £18,320 and the petrol £17,170.

Parker’s forecasts that the diesel will hold its value slightly better over five years, but buyers will lose a bigger slice of their original outlay when the time comes to sell. The diesel will be worth around £4385 in 2013 – a loss of £13,935 – while the petrol model (worth a little over £4000) loses £13,150.

This means that diesel owners lose £785 more over half a decade.

	Petrol	Diesel
Cost from new	£17,170	£18,320
Resale value in 2012	£4020	£4385
Loss	£13,150	£13,935

 

The 1.6-litre petrol loses £785 less over five years.

Fuel

The most volatile and difficult area to forecast over the next five years is the price of petrol and diesel.

Parker’s calculated future fuel prices by inflating annual figures by a fixed-rate percentage increase of 8.7% for petrol and 10.3% for diesel. These figures were determined by taking the average yearly inflation for fuel since 2003.

Fuel costs were based on an average annual mileage of 10,000 miles for both Mondeo models, with the 1.6-litre petrol returning 38mpg and the 1.8-litre diesel achieving 50mpg.

This difference in fuel consumption is offset a little by petrol currently costing £1.17 per litre and diesel costing 14p more, at £1.31.

Over five years, owners of a petrol Mondeo would shell out £1030 more than a diesel. This works out at just over £17 a month or £206 a year.

	Petrol	Diesel
2008 fuel costs	£1410	£1198
Five-year costs	£8388	£7358

 

Fuel costs for the 1.8-litre diesel are £1030 lower over five years.

Servicing

Based on Parker’s research and market expertise, the diesel model will cost £300 more to service over five years.

	Petrol	Diesel
Five-year costs	£1500	£1800

 

Servicing costs for the petrol Mondeo are around £300 cheaper over five years.

Insurance

Parker’s compared two like-for-like quotes for a 35-year old male Accountancy Manager for the petrol and diesel Mondeos. We then took an average for the top five best quotes and multiplied this by five, for each year.

There was only a slight difference between the models, with the diesel costing £10 more a year at £207.

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	Petrol	Diesel
Annual costs	£207	£217
Five-year costs	£1035	£1085

 

Insurance costs for the petrol Mondeo are slightly cheaper over five years, by £50.

 

The results

	Petrol	Diesel
Road tax	£1005	£615
Depreciation	£13,158	£13,933
Fuel	£8388	£7358
Servicing	£1500	£1800
Insurance	£1035	£1085
Five year total:	£25,086	£24,791

 

Total running costs for the Ford Mondeo 1.8 TDCi Zetec are only £295 lower than the 1.6 Zetec over five years - a weekly saving of just £1.13.

 

So the difference in running costs between a petrol and diesel Ford Mondeo over five years is just £295. This works out at a saving of £5 per month or only £1.13 a week.

Although the 1.8-litre TDCi engine is £400 cheaper to tax and its fuel bills are £1000 lower over five years, the petrol loses less value and costs marginally less to service and insure.

And this difference would be less if the Mondeos were sold before five years.

Low mileage drivers would benefit even less from a diesel model, because the frugal engine wouldn’t cover as many miles to reimburse owners - for their initial larger outlay when buying new - with considerably cheaper fuel bills.

In this example, a diesel Mondeo owner would benefit from a £21.30 saving per 1000 miles.

Annual mileage	Diesel savings
1000	£21.30
2500	£53.26
5000	£106.52
10,000	£213.04
20,000	£426.09

Calculate your annual petrol and diesel costs now.

With the used values of many petrol models plummeting as a result of rising fuel and tax costs, many dealers are favouring diesels. But, as Parker’s research shows, petrol-power isn’t always such a bad option.