When looking at those fuel economy numbers, be sure to compare apples to apples. You can't compare US EPA numbers with Canadian or European numbers, because the agencies test differently. The EPA is currently the most pessimistic (realistic?) rating agency on the planet, I think. So here are the EPA numbers for four potential competitors:
2009 Jetta TDI 6MT: 30 mpg city, 41 mpg highway.
2009 Corolla 1.8 5MT: 26 mpg city, 35 mpg highway.
2009 Matrix 1.8 5MT: 26 mpg city, 32 mpg highway.
2009 Acura TSX 6MT: 20 mpg city, 28 mpg highway.
2008 Toyota Prius: 48 mpg city, 45 mpg highway.
The Jetta TDI gets better fuel economy than everything but the Prius, and nearly matches the Prius on the highway. That said, if all you care about is saving money, you're probably still best off with a Corolla/Matrix, because (1) the initial price will be FAR less, (2) regular gas is cheaper than diesel, and (3) VWs have higher long-term running costs than Toyotas. If what you want to do is save money, nothing compares with a lightweight car with a simple, small, modestly-powered gas engine. Not hybrids, not diesels.
So why would anyone get this instead of a Corolla or Matrix? Two reasons:
1. BIODIESEL
I don't know how popular biodiesel is in Canada, but it's a big deal around here. Try finding a MkIV Jetta TDI or Golf TDI in Oregon without a biodiesel sticker. Go ahead. I dare ya. I think that biodiesel and electricity are going to be the two next big things. Electricity (whether plug-in hybrids or straight-up electric cars) make a lot of sense in the city. Biodiesel makes a lot of sense in rural areas and smaller towns, because it performs well on the highway and it works well with midsize and large cars, pickups, big rigs, and agricultural equipment. Electricity excels with compact cars, subcompacts, and scooters--more metropolitan options.
2. SUBJECTIVE APPEAL
A Corolla may transport people just as effectively as a Jetta, but the subjective feel is night and day. I'm not saying that those Teutonic intangibles are better than what the Civic/Corolla/Mazda3 offer--some people (including my mother) really like that "Corolla" feel--but they're sure as hell different. And some people, myself included, want a car with that certain German X-factor--the certain flavor of steering feel, suspension tuning, firm seats, and overall interior feel that makes a Jetta feel so darned different from other compact non-luxury cars. Honestly, I think a Jetta feels more like a TSX inside than it does a Civic (especially at upper trim levels), which is why I listed the TSX above as one potential competitor.
Another part of that subjective appeal is a diesel's torque. The Jetta makes 140 hp and 236 ft-lbs. The Corolla 1.8 makes 132 hp, 128 ft-lbs. Now, diesels don't make superb 0-60 times (perhaps due to turbo lag off the line?) but that 236 ft-lbs is going to feel a whole lot different on back roads and during highway passing maneuvers than 128 ft-lbs. It doesn't make it an objectively-better people mover, but once again, the subjective driving experience is night and day.
