Petrol or diesel – no clear cut winner

The recent release of the NZAA‘s official 2011 operating costs have highlighted the confusion many motorists now face when choosing between petrol and diesel fuelled vehicles. After all the data collection and number crunching, the big wash up would suggest that one fuel type has no clear advantage over the other when it comes down to the total operating costs. In areas where the diesel powered car has a clear advantage the petrol version claws its way back into contention by scoring winning blows of its own.

The AA operating costs are based on ownership of a new car for a 5-year period travelling an average of 14,000kms per year. It takes into account fixed costs such as retail pricing, depreciation, relicensing, WoF and where applicable (diesel) Road User Charges. Added into the calculations are day-to-day running costs such as fuel, maintenance, scheduled servicing and an allowance for tyre replacement.
Vehicles are broken down into four specific vehicle size groups (small, compact, medium and large).

Even when the operating costs are doubled in terms of total distance travelled per year, the difference between petrol and diesel remains just as close in almost every vehicle class.

With fuel prices on the increase, the obvious favourite to reduce operating costs is a diesel powered vehicle with its superior overall fuel consumption. Initial higher retail purchase prices however open the door for petrol vehicles to become more affordable. While diesel will always beat petrol in terms of fuel consumption, the improvements in engine design and technology often mean the differences are very marginal.

Diesels also face ongoing higher operating costs such as annual licence fees where ACC levies are bundled into a flat one-off charge regardless of mileage. With petrol vehicles, a portion of the ACC levy is included in the pump price so those who travel small distances are less exposed to the risk of an accident, and so pay less ACC than high mileage drivers.

For those who travel well under the national average distance each year and use their cars sparingly, it is hard to see any long term benefits in buying into diesel technology.

Regular maintenance and general repairs can also work in favour of petrol particularly as mileages increase.

At the end of the day what is important is the need to purchase a vehicle which is fit for purpose and meets the needs of owners. If regular and heavy towing is a priority then it’s hard to go past a diesel because of the low down torque available and better fuel consumption. If towing is restricted to hauling a standard size trailer to the Xmas camping site once per year then petrol may well be the better choice.

One thing the operating costs do highlight is the need to keep your car away from the garage as much as possible. With increasing labour rates, those cars with extended service intervals or free servicing for a prescribed time are certainly the ones to strongly consider.

Because owners of new cars are hit hardest with high depreciation costs there is a strong argument also to look for a late model, low mileage used vehicle instead of purchasing brand new.

Often new car dealerships will sell ex demonstrator vehicles at hugely discounted prices. These vehicles are still covered under their new car warranty programme and some have free servicing for a specific time period also.

Even purchasing a vehicle up to 10 years of age can make sound financial sense for many looking for reliable transport at affordable prices. Provided all the necessary precautions are taken prior to purchase, these vehicles can still provide reasonable low cost motoring.

At the other end of the scale however there does come a time where an older car with high mileage is going to become a constant drain of finances. In many cases repairs on engines and transmissions can cost more than a vehicles total value.

AA Members can access the 2011 operating costs by visiting MyAA or by calling 0800 500 333 (option 2). Non-Members can call 0900 58 324 (calls have a flat rate charge of $7.00).