European Brands Still Bullish About Diesels
By Drew Winter Ward's AutoWorld, Apr 1, 2009 12:00 PM

The economic crisis has claimed a lot of new vehicle and engine programs, and as cash-strapped auto makers have stripped down their near-term future product offerings to bare bones, a spate of highly anticipated U.S. light-duty diesel programs have been postponed or shelved indefinitely.

General Motors Corp. and Kia Motors Corp. are the most recent to back away from planned light-duty diesel introductions in light trucks, but in the past six months, Toyota Motor Corp., Honda Motor Co. Ltd., Ford Motor Co. and Chrysler LLC also have cancelled plans to introduce light-duty diesels during the next several years.

Nissan North America Inc. was expected to introduce a new diesel-powered Maxima sedan in April 2010, with an engine supplied by parent Nissan Motor Co. Ltd.'s French alliance partner Renault SA, but this looks doubtful as well because the auto maker is scaling back costs and programs to cope with a dramatic slowdown in global vehicle sales.

These pullbacks have led some critics to claim a new wave of super clean-burning, light-duty diesels is dead on arrival in the U.S.

Volkwagen AG, BMW AG and Daimler AG disagree. They began introducing a new lineup of diesels late last year clean enough to be sold in all 50 states. The engines are finding a receptive audience. Audi AG still is planning to introduce its Q7 cross/utility vehicle powered by a V-6 diesel in May and is anticipating a 15% take rate.

Volkswagen is seeing an 80% take rate for its TDI diesel option on the Jetta Sportwagen and a 30% take rate on the Jetta sedan.

Mercedes is seeing strong demand for diesels in its CUV lineup. Its 50-state Bluetec diesels were not available until last October, but about 25% of M-Class sales are diesel, with the larger GL-Class tracking at 21%.

BMW is seeing about a 20% take rate for the diesel engine option it began offering in the U.S. last December on its X5 CUV.

Falling U.S. diesel prices compared with gasoline are helping, auto makers say. Diesel was only about $0.13 more per gallon at the end of March.

European auto makers remain optimistic about diesels because they are immensely popular in their home markets, and because they have billions worth of production capacity devoted to production of oil burners.

For instance, 78% of new vehicles purchased in France were diesels in 2008, up four percentage points from 2007, says Thierry Seguelong, general manager of SB Consultants, in a recent report.

Observers peg much of diesel's growth in France and elsewhere in Europe on growing regulatory actions aimed at curbing carbon-dioxide emissions.

A new French taxation system featuring incentives for buying fuel-efficient cars and taxes on gas guzzlers is proving highly favorable to diesels, because they are inherently 25% to 30% more fuel-efficient.

But the belief in diesels goes beyond mere pragmatism. It reflects a philosophical and regulatory difference between the U.S. and Europe, says Joerg Rueger, senior vice president-engineering for diesel systems, Bosch LLC. European regulatory standards are more focused on reducing carbon-dioxide emissions than oxides of nitrogen, while U.S. standards are the reverse, he says.

Because diesels are more efficient than gasoline engines, but produce more NOx, they are popular with government regulation writers in Europe. But it puts them at a disadvantage in the U.S., where diesels are required to have expensive NOx-scrubbing exhaust aftertreatment systems.

Analysts say it's a difference rooted in how emissions regulations began in the 1970s, with Europe focused on becoming more energy independent by heavily taxing fuel and pushing consumers into the most efficient vehicles possible, and the U.S. concentrating on reducing smog and keeping fuel prices low.

Now that auto makers have perfected NOx emissions control systems that inject a urea solution into the exhaust stream and allow diesels to meet the toughest emissions standards the U.S. can dish out, European auto makers remain optimistic about the diesel's future in the U.S.

At Audi, it is a matter of corporate pride to succeed.

“(Diesel) is a technology that we're still bullish on because of our expertise in passenger cars since 1989 and our American LeMans TDI presence since 2006 with the R10 TDI (diesel race car) and now our R15 TDI 12 Hours of Sebring,” says spokesman Christian Bokich. “(Racing) is a perfect test lab to promote clean diesel and bring new diesel technologies to future TDI vehicles.”

So far, diesels seem to be resonating in the U.S. CUV segment because they offer a good compromise between gasoline V-6 and V-8 options.

For instance, BMW's V-8-powered X5 CUV is plenty fast, hitting 60 mph (97 km/h) in 6.4 seconds, thanks to the engine's 350 hp and 350 lb.-ft. (474 Nm) of torque. But fuel economy is a dismal 14/19 mpg (17-12 L/100 km).

The gasoline 3.0L I-6 version is not much better, offering 15/21 mpg (16-11 L/100 km). The 260-hp 3.0L I-6 version also is criticized for feeling underpowered. Even though the midsize CUV hits 60 mph (97 km/h) in 7.8 seconds, the engine makes only 225 lb.-ft. (305 Nm) of torque. That's a tall order for a vehicle that weighs 5,225 lbs. (2,370 kg)

Compare that with the 3.0L diesel, delivering 75 lb.-ft. (102 Nm) more torque than the V-8 at 1,000 rpm less than the I-6 delivers its meager 225 lb.-ft. The xDrive 35d also does 0-60 mph one second faster and offers 25% better fuel economy than the gas-powered I-6.

Put all those features together, a $1,550 income-tax credit, and you start to get a compelling case for diesel power.

Diesel skeptics point out innovations such as direct injection will enable gasoline engines to get closer to diesel-like efficiency. Bosch's Rueger, who says he has no axe to grind because Bosch supplies both gasoline and diesel engine technology, points out diesels are not a stationary target. They too, will continue to improve in efficiency and will gain features such as stop/start systems to lower consumption.

Diesels offer tremendous advantages for vehicles towing or hauling heavy cargo, too, up to 70% better fuel economy under heavy load than a comparable gasoline engine.

That still could make a smaller 4.5L diesel V-8 an attractive option to some light-duty fullsize pickup truck buyers, agrees Sam Winegarden, executive director-global engine engineering, GM Powertrain.

Insiders say GM, Ford and Chrysler all shelved their light-duty diesel programs simply to conserve cash and because volatile fuel prices make investing huge sums in an all-new engine program too risky. That doesn't mean they could not be revived if the business environment improves.

Winegarden says GM partnered with Isuzu Motors Ltd. in developing of its well-established 6.6L Duramax V-8 diesel and confirms GM has had discussions with Ford and other auto makers about jointly developing and building a smaller light-duty diesel.

“The problem is diesels are pretty expensive,” Winegarden says. “You are going to see a tendency for companies to try to partner. It gets down to, we're capital constrained, but it was inaccurately reported that we would sell our rights to our technology. We would like to have a partnership.”

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