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Diesel car price rise undermine cost benefit

The list price of diesel-powered cars has increased at almost double the rate of petrol equivalents over the past five years, further increasing the period over which a diesel car must be run before it proves more economical.

The monthly Glass’s New Car Market Trends report indicates that the list price of the typical petrol vehicle has risen by £351 since September 2000, compared to £677 for the average diesel.

In the popular lower-medium sector (for example Ford Focus, Vauxhall Astra, Toyota Corolla), the price premium for a diesel-powered model over a petrol version with identical specification has now reached an average £1,100.

After three years and 30,000 miles a petrol lower-medium car would still be cheaper to own, even when taking into account the higher residual value of the diesel.

Not until the average annual mileage exceeds 20,000 would the economic benefits of the diesel begin to pay off for this type of car.

"For upper-medium cars such as the Vauxhall Vectra and Ford Mondeo the picture is slightly better as there is a very small saving in pence-per-mile running costs,” said Alan Cole, editorial consultant for the Glass’s Market Intelligence Service.

"However, even at 20,000 miles per year the difference is only 1.4 pence per mile in favour of the diesel. Our analysis shows that the smaller the car, the smaller the financial benefit of diesel."

The Glass’s New Car Market Trends report indicates that list prices across the UK’s new car market as a whole rose by 1.4%, year-on-year, to the end of August 2005, equivalent to a rise worth £180 on the average car.

List price inflation has been highest in the upper-medium sector (for example Toyota Avensis, Ford Mondeo), with prices rising by 2.8% over the past 12 months, equivalent to an additional £454 on the average car.

Prices also rose at an above average rate in the lower-medium segment up 2.6% year-on-year. In the compact executive class (for example Audi A4, BMW 3 Series), list prices rose at the below average rate of just 0.1%. In the large executive class (for example BMW 5 Series, Mercedes E-Class) list prices fell marginally, by 0.1%, year-on-year. List prices of new superminis (Ford Fiesta, Volkswagen Polo) also fell over the period, down 0.3%, or £27.

The biggest single list price increase during August was for the BMW X5 4.8is, which had a rise of £550 rise to £57,690. The greatest list price drop was for the Ford Mondeo 2.0 TDCi 130 LX (Euro IV model), which saw saloon, hatchback and estate variants all subject to list price reductions of £595.

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