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Ram 1500 diesel payoff revisited

by David Zatz on

Recently, Allpar published figures showing how quickly the Ram 1500 diesel engine would pay off, compared with Ram’s gasoline engines. Frank Gal did the heavy lifting on the calculations, but we left out residual (resale) values, since they were unknown, and maintenance costs.

The Ram 1500 diesel is capable of towing 9,200 pounds, more than the V6 gasoline engine (7,450) but less than the Hemi V8 (11,500).

ALG, which calculates residual values for automakers, ratings agencies, and lenders, provided expected resale price retention for three sample Ram trucks. The company looked at the high end four wheel drive crew-cab Big Horn model, which they said was the most popular trim able to use any of the three engines, and estimated the resale value after three years:

4WD Big Horn Typical MSRP Estimated Value After 3 Years Net Cost
3.6 V6 $42,400 $20,500 $21,900
Hemi V8 $43,550 $22,025 $21,525
Diesel V6 $46,075 $23,500 $22,575
Engine Cost Typical MSRP Estimated Value After 3 Years Net Cost
Diesel vs 3.6 $3,675 $3,000 $675
Diesel vs Hemi $2,525 $1,475 $1,050

ALG’s Randy Lioz wrote that the retained value of the diesel over the Hemi  should be less marked than when compared with the gas V6, because more capable engines are important to full size truck buyers; but the diesel should hold more of its value than either gas engine. In addition, he wrote, “Diesels should be desirable in light-duty pickup trucks, but so are V8s, and while there’s no supply of diesels among 1500 pickups, buyers can move up to the used 2500/3500 market and find plenty of supply.”  (Ram’s Nick Cappa pointed out that the Cummins diesel will have much lower fuel mileage, given its much different capability and nature, and the greater weight and capability of the Ram 2500 and 3500.)

DEF is selling at Flying J filling stations for an average of $2.81 per gallon, adding up to around $34 per year, which we incorporated into diesel fuel costs in the chart. Maintenance over a three-year, 45,000-mile ownership period is mainly oil changes — $242 for the V6, $335 for the V8, and $433 for the diesel, which takes over ten quarts of oil. (We assumed changing at the maximum 10,000 mile interval, but in city driving, more frequent changes could be needed.)

Regardless of how you do the numbers, the gasoline V6 is cheaper to operate than the diesel at this time, because diesel fuel carries a large price premium over gasoline, including higher taxes. That advantage is eliminated if you need to tow or haul more than the V6 is capable of, or operate at high altitudes where the turbocharger in the diesel (or the added power of the V8) is needed, or just don’t want the gasoline V6. Fuel savings are still substantial when comparing the diesel against the V8 — even when one considers the added cost of DEF (around $34 per year).

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The diesel engine sells at a $2,525 premium in the 4×4 Crew Cab Big Horn. If one uses ALG’s residual estimate, the three-year cost of buying that engine is $1,050, plus interest in the loan or opportunity cost of having the money — figure $225 ($2,525 over three years at 3% interest). With the $98 difference in maintenance costs, the total gap comes to $1,373.

Opting for the diesel over the Hemi V8 should, therefore, pay for itself within three years in some regions of the country, and in the national average, unless one drives primarily highway miles. Most buyers do keep their vehicles longer, and the more years one adds in, the greater the advantage for the diesel. Likewise, the gap between diesel and gasoline, which is at a historic high, is likely to fall, especially if low-sulfur gasoline is mandated to make GDI engines more practical.

When towing, engineers told us that the diesel is likely to take less of a fuel-economy hit than gasoline engines, accelerating the time to payoff. The residuals for diesels vs gasoline engines are also likely to vary quite a bit by region.

Putting aside these numbers, though, we can quote Norm Layton: “The diesel pays for itself the first time you hit pedal and smile.”

Thanks to Frank Gal, ALG’s Randy Lioz, Ram’s Nick Cappa, and Blake Keithley for their assistance in this story. Note: chart updated at 9:58 am (incorrectly stated 15,000 miles rather than 45,000 miles. The chart reflects fuel savings after three years of 15,000 miles per year.)

David Zatz founded Allpar in 1998 (based on a site he had begun in 1993-94), after years of writing reviews for retail trades. He has been quoted by the New York Times, the Daily Telegraph, the Detroit News, and USA Today. Before making Allpar a full-time career, he was a consultant in organizational psychology. You can reach him by using our contact form (much preferred) or by calling (313) 766-2304

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