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Old 08-08-2011, 07:49 AM   #1
AVANTI R5
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Default Diesels poised, again, to win hearts in America


Neil Winton: European Perspective


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You have to hand it to the relentless, come-back kids who want Americans to embrace diesel cars.

About three years ago, the diesel forces led by the Germans, were poised to attack, armed with a convincing portfolio of claims to persuade Americans to dump all their old notions about oil burners.

Diesels weren't the hopelessly unreliable, noisy, smelly, smokey and gutless clunkers that emerged during the 1970s oil crisis. On the contrary, modern diesels were quiet, effortlessly smooth, torquey and much more economic than traditional gasoline engines. They were so good that rich German buyers of top-of-the-range Mercedes S class and BMW 7 Series sedans would specify diesel about 80 percent of the time. Forecasters scrambled to raise their estimates of the huge amount of share these diesels would command, with some predicting this would reach 15 percent of the U.S. market by 2015.

But these hopes crashed and burned as the price of diesel jumped, and the economy and car sales generally collapsed. As the car market revives and with U.S. fuel economy rules poised to tighten, Americans are looking for more fuel efficient motoring. The price of diesel is not much higher than gasoline now, and the proselytizers are refusing to quit, regrouping their forces and trying again.

Here in Europe, where every other new car bought is a diesel and the cost of fuel is eye-wateringly expensive, car buyers have long seen the advantages. But even in diesel-mad Europe, there has been a resurgence in demand for these cars. In the last six months, diesel market share in Western Europe suddenly soared to 55.3 percent from 50.1 percent in the same period last year, according to newsletter Automotive Industry Data (AID).

This is for a combination of reasons, according to AID managing director Peter Schmidt, which might also offer some new ammunition to persuade Americans to buy diesel, including more improvements in efficiency.
Squeeze

"There has been a squeeze on Europeans' disposable incomes because of the economic recession with people trying to cut costs wherever they can and motoring is one. Consequently the idea that running a diesel car of almost any size saves money has taken hold again. Also there have been renewed improvements in the latest generation of diesel engines which lower running costs, while government taxation rules are forcing people to buy more economical cars," Schmidt said.

He said that diesels always were very economic, but the latest models are even better, although the reasoning doesn't apply to the smallest of cars like the little Fiat Panda or Volkswagen Polo. Diesel engines raise the price of these cars by between 20 percent and 30 percent, and small car drivers typically don't do enough miles to be able to get their money back in lower fuel costs. It is the next size up, from small family cars like the VW Golf and Ford Focus, where diesel starts to make sense. The bigger the car, the more sense it makes. And this concentration on fuel economy has served up another new factor, Schmidt said.

European and Americans manufacturers have been pushing new gasoline engines which are lighter and use turbo-charging to extract more power and fuel economy. But they can't match diesels, Schmidt said, reckoning that over the past couple of years, gasoline engines have improved fuel efficiency by 3.5 percent, while diesels have spurted ahead again with a 7 percent gain.
Thirsty

"In the real world, on the open road, these turbo-charged gasoline cars are remarkably thirsty and come nowhere near claimed fuel economy levels," Schmidt said.

The renewed improvements in diesels will have a negative impact too on gasoline-electric hybrid car sales, Schmidt said. He pointed to the fuel economy of the Porsche Panamera diesel, which claims 34.6 miles per U.S. gallon, compared with the Panamera hybrid's 32.7 mpg, which might not seem much until you realize that the hybrid costs about $36,000 more for a comparable performance.

Lars Ullrich, director of Bosch Diesel Systems Marketing, North America, said diesel market share in America will reach 10 percent by 2015. His company has scaled down its previous forecast of 15 percent made before the 2008 downturn. This compares with forecasts from J.D.Power of 3.1 percent in 2011 accelerating to 7.4 percent by 2017. Baum & Associates expects around 4.5 percent this year, growing to between six and 6.5 percent by 2015.
Bosch's Ullrich said in a telephone interview from his Farmington Hills office, that American car buyers are ready and willing to buy diesel.
"Many new buyers are choosing diesels. In June, the "take" rate (when buyers are offered a choice between gas and diesel) was 34 percent. That includes buyers of the Audi A3, Audi Q7, BMW 335, BMW X5, Mercedes E and G class, VW Golf and Jetta. For the Jetta the take rate was 58 percent," said Ullrich.
Key driver for change

Almost 30 percent of new VW Jettas sold in the U.S. are diesels, across all markets including California, which has the toughest emissions standards.
"There is a key factor which is changing the market. The new generation of diesels is extremely clean and can change the market here in North America. These cars are fun to drive and economical too; that's the key driver for change. There's another change coming in 2016, when fleet average fuel consumption must reach 35.5 mpg. So manufacturers have to look for alternatives to meet this new regulation. Diesel is one of these," Ullrich said.

Washington wants this average fuel economy standard to reach 56 mpg by 2025.

Perhaps the key to triggering American interest in diesels will be if GM, Ford and Chrysler decide to enter the market in a big way. These companies certainly have access to diesel technology because of their European subsidiaries or associates. News earlier this week that GM's Chevrolet will offer a diesel engine in the Cruze in 2013, suggests the tide may be turning. Chevy last offered a diesel in 1980s, in the Chevette subcompact.

One of the inhibiting factors on diesel use in the past has been the price and availability of the fuel. According to Ullrich, the diesel premium is now about 6 percent, but this is more than compensated for by the 30 percent improvement in fuel economy. Fuel availability should be less of a problem because several oil companies have increased refinery capacity for diesel in North America.
Big differences

Eric Fedewa, auto analyst for IHS Automotive in Detroit, can see the case for diesels, but isn't so sure a breakthrough is imminent. He points to the higher costs of engineering for a diesel engine, and the fact that the availability of diesel fuel in the infrastructure is still not ubiquitous. Power train options in the future are likely to be wide-ranging, with hybrids, diesels and electric vehicles, and that's why there are big differences in some market forecasts.

Costs will be the main determinant.
"There is a potential to expand the diesel market in North America, but all the barriers are still there and there are significant challenges for engine manufacturers and technology suppliers. First and foremost is cost of manufacture; that is always the biggest factor," Fedewa said.
Professor Ferdinand Dudenhoeffer of the Center for Automotive Research at the University of Duisberg-Essen in Germany isn't convinced that diesels are about to conquer America.

He points out that in Europe, government taxation is often the reason diesel has a financial edge, while the price premium in the U.S. makes it hard for diesel to appeal.

Looking to the medium term, Dudenhoeffer said the search for the most environmentally friendly and energy-efficient fuel for the U.S. points to natural gas, which is being pushed by Fiat-Chrysler. In Europe, politicians are becoming uneasy about the contrived advantage received by diesel. The European Commission, the European Union's executive arm, has said this subsidy for diesel can't go on, and wants all fuel to be taxed based on its energy content. This would be bad news for diesel and good for natural gas, but this change isn't likely to start until 2023.
The likes of BMW, VW and Mercedes shouldn't get too enthusiastic about diesels in the U.S.
Concentrate on hybrids, natural gas

"My point of view is that the Germans should concentrate on hybrids and natural gas and then they can earn much money in an even faster time," Dudenhoeffer said.

AID's Schmidt believes that because Americans buy larger and more powerful cars, diesels are the perfect solution for them, beating hybrids for economy and price. But it needs a final push from U.S. manufacturers to get into a higher gear.

"That's the big if. Now it is just the Europeans pushing diesels into North America. If the likes of GM, Ford and Chrysler don't follow suit, it will be a fringe sector forever," Schmidt said.
That Chevy Cruze news could be the game changer.
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Old 08-08-2011, 10:58 AM   #2
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I still have concerns about the longevity/reliability of emissions equipment on modern diesels.
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Old 08-08-2011, 12:21 PM   #3
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Originally Posted by arghx7 View Post
I still have concerns about the longevity/reliability of emissions equipment on modern diesels.
Agreed.

Disclosure: During the first half of this year I actively pursued replacing my '05 FXT daily driver with a CPO '08-09 E320 Bluetec. But for a couple of business deals that didn't come through I'd have done so by now. I wanted to go with the last of the W211s as they were at the end of their production cycle; research led me to conclude that build quality had risen after the notorious lows of the W201s and early W211s.

The AdBlue and run-flat tire requirements on the W212 Bluetecs make them less attractive to me either as new cars or as CPOs - especially the run-flats as I'd want both summer and snow tires for the RWD car where I live.
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Old 08-08-2011, 02:49 PM   #4
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One big problem is diesel fuel is the most expensive at the pumps. Kinda kills the savings. I do like the torque and punch driving them.
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Old 08-08-2011, 06:17 PM   #5
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Originally Posted by lark6 View Post
[...]
The AdBlue and run-flat tire requirements on the W212 Bluetecs make them less attractive to me either as new cars or as CPOs - especially the run-flats as I'd want both summer and snow tires for the RWD car where I live.
Sure, run-flats are definitely an issue in your case. But I understand that "AdBlue"-compatible fluid is fairly easy to find since it's available at pretty much any truck stop. I also understand the AdBlue tank is easy to access and top off on MB vehicles. I admit I only did light research on the subject last year.
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Old 08-08-2011, 08:11 PM   #6
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Originally Posted by arghx7 View Post
I still have concerns about the longevity/reliability of emissions equipment on modern diesels.
I still have concerns about the longevity/reliability of the diesel cars that are offered on our shores. All German, none with a particularly good record.

Give me a Subaru, a Honda, a Toyota diesel option then I'll take a look.
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Old 08-08-2011, 08:19 PM   #7
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My dad has had a Jetta TDI for 2 years now and hasn't had any problems. It drives nicely and has great torque. And as long as he goes down to SC he saves a lot of money at the pumps.
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Old 08-09-2011, 09:30 AM   #8
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I love my Touareg TDI. I get around 30mpg on the highway and average somewhere around 22 city.

Even towing a car I get 20mpg. It is great. I drove from Toledo, OH back to central Pa not long ago and never had to stop to fill up, 7 hours towing a car and no stopping was great!!
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Old 08-09-2011, 09:54 AM   #9
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Originally Posted by Rivers61 View Post
My dad has had a Jetta TDI for 2 years now and hasn't had any problems. It drives nicely and has great torque. And as long as he goes down to SC he saves a lot of money at the pumps.
VW TDI Had BIG problems with Lobe wear on the cams, I think it was 05-08, People got screwed at 60k for top engine overhaul (5 grand on average). They used this cheap metal to save money, like our crappy pistons.
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Old 08-09-2011, 10:29 AM   #10
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Quote:
Originally Posted by WHAT View Post
I love my Touareg TDI. I get around 30mpg on the highway and average somewhere around 22 city.

Even towing a car I get 20mpg. It is great. I drove from Toledo, OH back to central Pa not long ago and never had to stop to fill up, 7 hours towing a car and no stopping was great!!
OT:

You live in Lansdale? Where do you work?
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