Will diesel cars depreciate horribly from here on in?

McGuillicuddy

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As mentioned in another thread I am looking to replace my MK4 wagon with something newer. I've been considering a 328d but I was thinking that buying an expensive diesel car at this time might be a particularly bad idea because it could depreciate horribly (i.e. more than petrol cars) over the next 5-7 years. Diesel is already considered less environmentally friendly than petrol engines (less CO2 but more other pollutants), and the price of diesel is now consistently higher than regular gas. Along with the increased efficiency of petrol engines the cost-per-mile benefits of diesel for many motorists are eroding, and only the very highest mileage drivers and diesel enthusiasts like ourselves will be left. Seems to me like this would be a particularly bad time to spend $30K + on a diesel car since it could be next to worthless no too far down the road.

Note: I am aware that it is a bad time to buy *any* vehicle right now, and that as supply begins to improve that anybody who paid pandemic pricing will see huge depreciation over the next few years. But I am wondering if diesel cars will be even worse and the average car.

Thoughts?
 

oilhammer

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outside St Louis, MO
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There are just too many to list....
I don't care about depreciation. But I don't think that will happen. I think there will always be a certain segment of us that will prefer them, and I really don't see that changing any time soon. Plus, it isn't exactly like a gas 3-series BMW (or ANY modern BMW) doesn't go down in value faster than the Russian Ruble has, LOL.

Keep in mind, right now, the market is nuts. Also keep in mind, environmental friendliness is not a big factor... if it were, the F150 wouldn't be selling like it is, and Ford would not have killed off literally all of their cars except the Mustang. GM just killed off the Spark and Sonic, too. But you can still be certain they'll sell every Silverado they make. FCA stopped the 500, but those big Rams are still selling.
 

McGuillicuddy

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If I keep my MK4 I won't care about depreciation either. Similarly if I replace it with a CR TDI wagon for < CAD$20K. But if I buy a 328d wagon for CAD$40K+ then I certainly will.
 

MukGyver

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I agree diesel should not anytime soon be a larger factor in depreciation than gasoline. Unless you live in California where you never know what drum they're going to beat. Could be a ban on water next. lol is why I'm sticking with my mk4! ;)
 

McGuillicuddy

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The value of your MKIV has gone up in recent years, not down. If you're worried about depreciation, don't buy any BMW.
Well every vehicle has gone up in recent years due to supply/demand. Fair point on the BMW depreciation though. Although even the BMWs seem to be immune to depreciation at the moment with 4 year-old cars going to 75% of MSRP.
 

IndigoBlueWagon

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That's momentary. BMW ownership costs are so high enough that people run away from them when they get old. I just finished having the suspension renewed on my 335d. Koni Special Actives, which are reasonably priced, but I replaced all the control arms because they were pretty obviously worn at 70K miles. Parts alone for stock arms in the aftermarket is over $500. I don't have the labor bill yet, but I'm sure it's not small. If you look at the suspension install kit it has exponentially more parts in it than a VW kit.

Lots of other things are expensive, too. The 335d is a unique car, but if I were looking at a 328d I might go for an NMS Passat instead.
 

McGuillicuddy

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Canada
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2003 Jetta Wagon (5MT)
That's momentary. BMW ownership costs are so high enough that people run away from them when they get old. I just finished having the suspension renewed on my 335d. Koni Special Actives, which are reasonably priced, but I replaced all the control arms because they were pretty obviously worn at 70K miles. Parts alone for stock arms in the aftermarket is over $500. I don't have the labor bill yet, but I'm sure it's not small. If you look at the suspension install kit it has exponentially more parts in it than a VW kit.

Lots of other things are expensive, too. The 335d is a unique car, but if I were looking at a 328d I might go for an NMS Passat instead.
There is no NMS wagon in NA. A 2010 Passat Wagon is on my list of potential replacements for my MK4 if I can find one in nice enough shape/low enough miles.
 
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IndigoBlueWagon

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I like the 328d wagon, but the x-drive only configuration and the panoramic sunroof are turn-offs for me. And if you get one I'd probably suggest a certified pre-owned one if you can find one. The warranty is going to be important.
 

oilhammer

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outside St Louis, MO
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There are just too many to list....
The B6 wagons after middle 2008 are cursed with the horrid CCTA engine. You don't want one of those. The VR6 was a rare option, but those have their own nightmares of wallet-crushing failures.

I've also pretty much added the CKRA NMS on my "never own" list. Seems they are just too fragile to depend on long term. The latest trend is the little oil galley plug in the cylinder head starts leaking oil... and it manifests itself exactly like the leaking cam seals that seem to have become rampant on them. So you tear the front of the engine apart, clean it all off, replace the cam seal, get it all back together, and find out it is still leaking.

Sad, because while as boring as a rental Impala, the NMS is overall a nice, roomy, comfortable car. But with the Chinese HVAC motors failing, the heater cores clogging, the compliance bushings failing, and the CKRA's seemingly never ending litany of failpoints... no thanks. I have customers who have had more done to their NMS TDIs in the last year than I've done to my B5 Passat since it was new, and it is about ready to cross 240k miles.

The 2.5 gasser bolted to the 6sp Aisin slushbox isn't a bad package on the NMS, though. And that is how a lot of them are equipped. A leaky vacuum pump is almost guaranteed before it hits 100k miles, but mostly they are pretty decent. Long term is still an unknown on the CVCA engines, but the few I see so far have also been OK beyond the common early water pump failures. The SCR system on the NMS TDIs (both CKRA and CVCA) also seems to be somewhat fragile and software glitchy.
 
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McGuillicuddy

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Joined
Apr 23, 2013
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2003 Jetta Wagon (5MT)
The B6 wagons after middle 2008 are cursed with the horrid CCTA engine. You don't want one of those. The VR6 was a rare option, but those have their own nightmares of wallet-crushing failures.

I've also pretty much added the CKRA NMS on my "never own" list. Seems they are just too fragile to depend on long term. The latest trend is the little oil galley plug in the cylinder head starts leaking oil... and it manifests itself exactly like the leaking cam seals that seem to have become rampant on them. So you tear the front of the engine apart, clean it all off, replace the cam seal, get it all back together, and find out it is still leaking.

Sad, because while as boring as a rental Impala, the NMS is overall a nice, roomy, comfortable car. But with the Chinese HVAC motors failing, the heater cores clogging, the compliance bushings failing, and the CKRA's seemingly never ending litany of failpoints... no thanks. I have customers who have had more done to their NMS TDIs in the last year than I've done to my B5 Passat since it was new, and it is about ready to cross 240k miles.

The 2.5 gasser bolted to the 6sp Aisin slushbox isn't a bad package on the NMS, though. And that is how a lot of them are equipped. A leaky vacuum pump is almost guaranteed before it hits 100k miles, but mostly they are pretty decent. Long term is still an unknown on the CVCA engines, but the few I see so far have also been OK beyond the common early water pump failures. The SCR system on the NMS TDIs (both CKRA and CVCA) also seems to be somewhat fragile and software glitchy.
Thanks for all that info Oilhammer. I didn't realize that version of the 2.0T in the 2010 B6 wagon was especially problematic. I actually may have had one in my 2013 GTI but I sold it with less than 100K kms on it so never had time to run into major issues. I do recall there being a systematic issue with the timing chain tensioner but mine had the late-2012 revised design that seemed to fix the problem. Now that you mention it I do remember a rather expensive fuelling issue that was fortunately covered under warranty. It's too bad because I always liked the look of the B6 wagon and it otherwise hits alot of my checkboxes. Oh well, the search goes on...
 
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oilhammer

Certified Volkswagen Nut & Vendor
Joined
Dec 11, 2001
Location
outside St Louis, MO
TDI
There are just too many to list....
The EA888 engine family as a whole is very problematic. I get at least two a month here that are tooefed. The latest (and it is STILL sitting here) is a 2016 Passat with only 97k on the clock.... chain 'sploded, and sent so much valve/piston chunks flying that all four spark plugs were shattered, LMAO.

There are several class action lawsuits in the works for these turds.
 

McGuillicuddy

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MukGyver

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Better hope it doesn't happen or you'll have much more frustrating things to talk about than the impracticality of owning a diesel car. About everything you pay for will reflect the increase in diesel

There's also this:


If the price of diesel goes significantly above that of regular unleaded on a continuing basis then there remains very little reason for anybody outside diesel enthusiasts to want a diesel car.
 

hskrdu

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Maryland and New England
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2003 Golf GLS 4D 5M, 2015 GSW SE 6M
As mentioned in another thread I am looking to replace my MK4 wagon with something newer. I've been considering a 328d but I was thinking that buying an expensive diesel car at this time might be a particularly bad idea because it could depreciate horribly (i.e. more than petrol cars) over the next 5-7 years. Diesel is already considered less environmentally friendly than petrol engines (less CO2 but more other pollutants), and the price of diesel is now consistently higher than regular gas. Along with the increased efficiency of petrol engines the cost-per-mile benefits of diesel for many motorists are eroding, and only the very highest mileage drivers and diesel enthusiasts like ourselves will be left. Seems to me like this would be a particularly bad time to spend $30K + on a diesel car since it could be next to worthless no too far down the road.

Note: I am aware that it is a bad time to buy *any* vehicle right now, and that as supply begins to improve that anybody who paid pandemic pricing will see huge depreciation over the next few years. But I am wondering if diesel cars will be even worse and the average car.

Thoughts?
Sorry for the delay, this was slowly assembled, like the pandemic VWs in Mexico...

Thoughts:
Depreciation: Depending on exactly how you run it, depreciation is largely determined by initial cost minus resale value (or TMV, if not selling, and only accounting for depreciation). The value of TDIs over the last 20 years, have remained substantially higher than their gasser counterparts, when comparing like models and trims. This means TDIs see less of a depreciation hit. (It's likely true for TDIs and VW IDIs prior to 2000, but I haven't done that comparison).

Timing: Since depreciation is partially determined by market value, and TDIs have sharply increased in market value as the cost of all fuels has risen, depreciation as a factor of TCO is less of a loss for those that sell while value is higher. That means that just as selling now reduces depreciation on TDIs bought prior to the spike in TDI values, buying now does increase your chances of seeing higher depreciation, but not because TDI values will plummet compared to gassers, but because you purchased at a high point. Your sense that TDI values will plummet (as compared to their gasser cousins) has no support over the long-term history of values.

I've been considering a 328d but I was thinking that buying an expensive diesel car at this time might be a particularly bad idea because it could depreciate horribly (i.e. more than petrol cars) over the next 5-7 years.
Buying almost any expensive car is a particularly bad idea if you want to avoid depreciation as a factor of TCO. Obviously the first owner takes the biggest depreciation hit, and some cars certainly lose value more quickly, or more completely than others, but the more you spend on a car the more likely you are to see TCO rise due to depreciation. The obvious way to offset depreciation as a factor of TCO is through high resale value, and given that TDIs hold their value compared to their gasser counterparts, the TDI see less of a depreciation hit. I can't speak to the diesel BMW.

Diesel is already considered less environmentally friendly than petrol engines (less CO2 but more other pollutants), and the price of diesel is now consistently higher than regular gas.
Obviously this isn't an emissions thread, but those who consider diesel less environmentally friendly are typically working with narrow parameters, often which favor their bias. From a TCO standpoint, it has little impact on depreciation, unless the claim is that TMV will shrink due to reduced demand. I think this unlikely, but certainly one could make a reasonable argument. The value of "dieselgate" cars, which are the most likely candidates for a shrinking market due to negative media attention have seen shockingly high values compared to their gasser counterparts.

For most owners, the average price of diesel has been higher than the average price of regular gas for a long time, likely since the period of ULSD, depending on where you live. Of course, this isn't always the case, and several time I've paid less for D2 than RUG in various states over the last 5 years. Despite the typical higher cost of D2, the value of TDIs has remained consistently higher than their gasser counterparts. In part, this is due to (1) the difference in cost of fuel per gallon versus MPG, and in part (2) due to how rising prices offset the difference in price as a percentage.

The first is obvious: A MkIV gasser Golf in the family gets, for a lifetime average, 27 in the city and 33 on the highway, or 30 MPG combined. My MkIV TDI Golf has a lifetime average of 48 MPG. We can express this FE ratio in several different ways, but when we compare it to the average price difference between RUG and D2 over the last decade, we find the superior FE of the TDI outweighs the cheaper cost of RUG. There are several things to note: (a) Obviously the cost of D2 could jump, skewing the cost ratio to RUG, but in general, D2 is much more stable than RUG. (b) Comparing D2 to the cheapest gas is only good for those who use RUG, for VW owners (and anyone else) who require PUG, both the fuel cost ratio and FE ratio favor the TDI. (c) I'm comparing MkIV gasser to TDI, but the FE vs fuel cost ratios skew even worse for gasser cars industry wide, where many can't return an average of 30 MPG. (d) The FE vs fuel cost comparison skews to the positive for some hybrids and BEVs, but those still have a higher TCO due to initial cost.

The second part of the equation has to do with rising prices. Here I'll keep the math simple for ease of comparison. At $1.00 a gallon for RUG, and $1.50 a gallon for D2, diesel is 50% more expensive than RUG, and D2 seems like a ripoff. When prices rise, and RUG is $2 and D2 is $3 per gallon, diesel is now a $1 more per gallon, and our TDI doesn't make sense. When prices jump again, and RUG is $5 and D2 is $6.50 per gallon, you'd have to be crazy to have a TDI. You can already see the issue here. As the prices rise, the percentage difference between prices drops. In the first instance, our TDI has to get 50% better FE. In the second instance, the price gap has increased, but requirement for 50% better FE hasn't changed. In the third example, the fuel spread is the highest, but our TDI only has to get 30% superior FE to match the cost difference.

What's more notable for real world numbers are two factors: (a) D2 is very rarely higher than gas (as a percentage cost compared to FE) despite my examples (I've never seen it for my comparisons), so real world fuel prices favor the TDI more than my examples. (b) Although TDIs do get 50% better FE than many cars, the comparison must be between cars that the individual is considering. Beating the AAA FE average for sedans is easy, as is improving over a medium or large truck as a DD, but a Jetta 1.4T getting 40 hwy vs a TDI at 50 hwy brings the ratios much closer. Someone considering a gasser BMW vs diesel BMW must do that comparison, which might be close in fuel cost per mile. Someone going from a Jeep or F150 as a DD to a MkIV Jetta TDI will see an enormous drop in fuel cost per mile. Someone going from a MkIV Jetta TDI to new hybrid or BEV may also see lower cost per fuel mile. What's interesting is that all of these scenarios may see higher TCO, which is why proper maintenace and longevity are the golden recipe for low TCO.

Along with the increased efficiency of petrol engines the cost-per-mile benefits of diesel for many motorists are eroding, and only the very highest mileage drivers and diesel enthusiasts like ourselves will be left.
Cost per mile is a great way to express the cost of owning a vehicle. The problem is that fuel cost per mile is only one expression of TCO, and although important, may not correctly express the realities of comparing vehicles. Depreciation is typically the biggest factor in TCO, but can be avoided by buying older used cars where value has leveled off, and purchase price vs market value produces minimal loss. For most new cars, fuel costs tend to be the second most significant factor in TCO, but this isn't true for cars that require especially high maintenance costs (and here we aren't including unusual or catastrophic incidents). This may also not be true in situations where the owner includes fuel "upgrades" into their TCO, such as home chargers and solar panels for BEVs, where these costs raise the TCO (expressed either as a fuel factor, maintenance factor, or other factor). Of course, many BEV proponents don't include these in their TCO, and my guess is that bias is an issue.

As said, as gassers improve their FE, the advantage that TDIs have in fuel cost per mile lessens, but the advantage remains regardless of how someone drives their vehicle (city/hwy), unless you are only comparing best case hybrid scenario in the city, versus worst case TDI operation in the city. Here the fuel cost per mile swings away from the TDI, and we'd have to compare TCO as a whole to see if the impact is noticeable. Note again, that if fuel prices rise, and if the percentage cost of D2 vs RUG narrows, the impact of gasser gains in FE are reduced.

Seems to me like this would be a particularly bad time to spend $30K + on a diesel car since it could be next to worthless no too far down the road. Note: I am aware that it is a bad time to buy *any* vehicle right now, and that as supply begins to improve that anybody who paid pandemic pricing will see huge depreciation over the next few years. But I am wondering if diesel cars will be even worse and the average car
In terms of depreciation and TCO, you have it captured. Avoid a big depreciation hit by not buying at inflated prices. Contrary to your assertion of gasser vs diesel, history suggests the opposite: The TDI is the better long term bet. I can't speak to the BMW either in terms of TCO or other costs, but I"m guessing the diesels will the ones still running, loved, maintained, and commanding higher prices than their gasser cousins.

If TCO is your primary concern, buy used, favoring low maintenance costs and high fuel economy. This might put you in a Honda Civic or equivalent, which is why discussions of TCO only go so far, and comfort, space, community, and the joy of driving often trump dollars and cents.
 
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Steve140

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Komoka, Ontario
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I’m seeing insane prices for decent ALHs now. As in like 5k for a good one. That’s a good return on investment for a 20 year old car. They’re getting hard to find now though!
 

Fitn3rd

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Markham
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2011 Jetta TDI Highline
I just got 650km on my 2011 Jetta DSG.
Mixed highway, sitting in traffic and city driving.
The gauge said 7.8l/100km.

That's equivalent to a 2020+ civic.
 

Mongler98

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98 Jetta TDI AHU 1.9L (944 TDI swap in progress) I moved so now i got nothing but an AHU in a garage on a pallet.
I’m seeing insane prices for decent ALHs now. As in like 5k for a good one. That’s a good return on investment for a 20 year old car. They’re getting hard to find now though!
i disagree. if you are the original owner... definitional not..... a return on an investment? so spend 30K in today money back then, another 10k in repairs to sell it for 5k?

there are few cars worth investing in as a sale in the future. VW is not one of them.
 

P2B

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Return on investment isn't the right term, but if you bought a used ALH 10 years ago and maintained it, it's still worth roughly the same as you paid today. Zero depreciation puts a big dent in your total cost of ownership.
 

Mongler98

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98 Jetta TDI AHU 1.9L (944 TDI swap in progress) I moved so now i got nothing but an AHU in a garage on a pallet.
Return on investment isn't the right term, but if you bought used ALH 10 years ago and maintained it, it's still worth roughly the same as you paid today. Zero depreciation puts a big dent in your total cost of ownership.
The bigger picture is not so simple but let’s put it this way (an expansion of what you said)
If you buy a 20 year old car 5 years ago for say $5k you can expect to spend 10% of its original cost in maintenance every 5 years. You buy a used car; you buy its maintenance package, not of a $5K car, but that of the cars value when it was new regardless.
10% is a supper rough average for cars within the "normal homes income" I consider a VW to be such a car, same with a Toyota or ford.
If you spend under this % you did well but might be passing the inevitable buck to the next owner or you got the buck passed to you. This is where the investment in knowledge can be had. Knowing what is a good deal.
The Absolute best deal you can have by today DIY average cost is $2,000 per 4 year for 60K miles. I for one always shoot for $1,000 spent to get 45K miles over 2 years.

It’s about the $ per mile in the end. This is why TDI's tend to win out against others as they tent to get long service life vs the cost.
For instance, I got my escape @171K for $150 (blown engine) did a swap and then later a Trans. Now it’s at 300K, new exhaust CARB compliant, tires, glass, and everything to keep it in good working order as things go out on it. It owes me about $5k now with the exhaust done and all the maintenance to date including tires. I got 130K miles over 7 years for 5 grand and it’s been the most reliable car I have ever had. That’s a good investment.


You can also say it this way, you make your $ when you buy, not when you sell. Thus the investment is in the deal, not the sale.
I got my investment when fixed it up, not when I go to sell it in a few months now that I need a van. Best case she is worth 4K in the condition it’s in.
I did not loss $1k; I spent $4K to drive for 7 years for a 45K car when it was new.... VERY GOOD INVESTMENT
I would have spent 2x that in half the time on a TDI if I had to do the same work I have done.......
Depreciation means NOTHING to any daily driver type automobile after the 10th year of life as the $ is about how many miles or smiles per mile you get.... whatever the goal is. My Wife’s Cayenne is worth 14K, she got it for 6k, I put about 2k into it to rebuild the engines TC, and mother 2k for tires and what not. It’s not cheap to drive, but it’s FUN and fits our son’s medical equipment and is a nice treat for someone who works so hard. Bottom line on that is it’s about $ / smile per mile and it’s great. That car was 150K in today’s money when it was purchased in 2004, I would say it’s a decent investment only because we can sell it for more than we got it for but not enough to pay for my labor on it though. SO vie lost out on sweat equity but gained in seeing her smile around the corners.
 
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