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According to the U.S. Environmental Protection Agency (EPA), diesel vehicles are making a comeback in the states after a couple decades of sparse product offerings and lackluster sales. Diesels were last popular in the United States during the 1980s, but noisy, dirty and unreliable models gave the technology a bad name and deterred buyers for years to come. Conversely, during this same period, diesels have been extremely popular in Europe and just about every model on the market offers diesel as an option.

Today’s diesel vehicles are much improved over past models and employ the latest technology available making them cleaner, more powerful and more fuel-efficient than ever before. The EPA estimates that modern diesels are about 30-35% more fuel efficient than their gasoline counterparts, and still meet all of the same strict emissions standards due to advances in engine technologies, ultra-low sulfur diesel fuel and improved exhaust treatment.

While diesel vehicles are some of the most efficient models on the road today, their upfront cost is often times thousands of dollars more than similar gasoline counterparts. So, are diesels worth the premium? We’ll try to help answer this question by looking at the used price performance of two popular three-year-old diesel models, the 2011 Volkswagen Jetta TDI and 2011 Mercedes-Benz ML350 BlueTEC 4MATIC.

For the sake of this comparison we’ll look at each model’s combined MPG, new typically equipped MSRP (the most common way a vehicle was configured for its model year), April 2014 average trade-in value, and retention after three years of ownership versus similarly equipped gasoline models.

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Diesel versions of the Jetta and ML350 beat out their gasoline counterparts in every category except for carrying higher new equipped MSRPs. While each diesel model was more expensive up front, the extra outlay of money appears to be well worth it after three years of depreciation.

When new, the diesel Jetta was $3,584 more expensive than a similar gasoline version, but looking at NADA Used Car Guide Average Trade-In values from April 2014, we see that the gap between values has expanded to $3,925 in favor of the diesel. After three years of depreciation, the Jetta TDI has retained 60.1% of its original typically equipped MSRP; during this same period, the gasoline-only SE model has retained a much lower 51.6%.

The same holds true for the ML350: when new, the diesel version commanded a $910 premium over a similarly equipped gasoline model, but current trade-in values show that this spread has increased to $3,400 in favor of the diesel. After three years, the ML350 BlueTEC 4MATIC has retained 52.3% of its original typically equipped MSRP, while the gasoline-only ML350 4MATIC has retained a slightly worse 47.1%.

2011 model year diesel versions of both the Jetta and ML350 earned significantly better combined fuel economy ratings. The Jetta TDI beat out its gasoline counterpart by 7 MPG and the ML350 BlueTEC scored 4 MPG better than the gasoline version, but it’s important to consider the price differences between diesel and gasoline and also the required octane rating of each gasoline model. For example, the gasoline version of the Jetta runs on regular grade, while the ML350 requires more expensive premium grade fuel.

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The table above shows the average 2013 fuel cost associated with each model when driven 15,000 miles. Although diesel fuel was more expensive than both regular and premium grade gasoline in 2013, the improved economy of the Jetta TDI and ML350 BlueTEC allowed for yearly fuel savings of $217 and $571, respectively.  

Bottom line: it’s very important for consumers to review their vehicle usage habits and compare differences in retention and efficiency before making the choice between diesel and gasoline. While diesels are more fuel efficient and generally earn higher used retention scores, costs can be substantially more up front, and the widening spread between diesel and gasoline prices – which went from 11 cents in 2009 to 42 cents in 2013 – mean that fuel savings may not be as great as they once were.