Diesel Truck Demand and Resale Values Drop Dramatically
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Sales of full-size pickups aren't the only things falling steeply as fuel prices rapidly rise. Resale values for diesel powered heavy-duty trucks have crashed, according to vehicle appraisal and pricing company Black Book.
Only a year ago, when regular gasoline averaged $3.16 a gallon and diesel was $2.80 a gallon, diesel engines carried a premium at auction. They were valued an average 20 percent higher than their original option price in 2005 model year vehicles. In 2007, a 2005 Ford F-250’s 6.0-liter V-8 Power Stroke jumped in value 27 percent, a 2005 Chevrolet Silverado 2500’s 6.6-liter V-8 Duramax increased 17 percent and a 2005 Dodge Ram’s 5.9-liter inline six-cylinder was worth 4 percent more than when the truck was new.
Today, fuel costs have flipped. The average price of diesel has risen by $2.00 a gallon, to $4.80, while regular unleaded has 'only' increased 85 cents, to $4.01 a gallon, according to AAA. The price difference is costing diesel owners as much as a $1,000 more annually to fill up their trucks than comparable pickups with gas engines.
As a result, Black Book's research shows the resale values of 2005 to 2007 diesel-powered heavy-duty pickups have plummeted an average $5,900 since January, while gasoline-powered three-quarter and one-tons have fallen $3,000. $5,900 represents as much as a 20-25 percent decline in vehicle value.
Some cases of diesel deflation are extreme. Automotive News reports Kelley Blue Book puts the average trade-in for a heavy-duty Silverado or GMC Sierra with a diesel at about $17,000. A new 2008 Chevrolet Silverado 2500 extended cab pickup with a Duramax diesel has an MSRP of $36,000.
Diesel engines have long been the primary choice of heavy-duty truck buyers, who crave high torque at low engine speeds to get big loads moving quickly and steady torque over a broad range to climb steep hills. They also tend to have 15-20 percent better fuel economy than gasoline engines because diesel fuel has a higher energy content per gallon and a diesel engine's high compression ratio and long piston strokes enable the engine to work harder using less fuel at low RPM.
According to automotive market-research firm R.L. Polk & Company, diesels dominated heavy-duty truck sales in 2006, with over 69 percent engine share.
Diesels also carry a higher purchase premium, ranging from $5,500 to $7,000. Their engines and transmissions are built using sturdier components to handle the higher compression and combustion pressures and torque output. And newly required emissions hardware (mandated as of January 2007), like diesel particulate filters implemented to reduce soot levels, has added even more cost and complexity to diesel-equipped HD pickups. Some estimates put the added costs at $1,500 or more.The premium for a diesel equipped truck is expected to rise again next year as manufacturers roll out new pickups compliant with even tougher 2010 emissions regulations aimed to reduce nitrogen oxide emissions (NOx). Most NOx-scrubbing engines will require periodic fill-ups of urea, adding a new maintenance expense for diesel owners.
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