Diesels - US Driver Want Them but Can't Get Them

In Europe, more than half of all vehicles are diesel-powered and offer 30% better fuel economy. Why can't the U.S. follow its example?

Paris April 27, 2006; Matt Vela writing for Business Week Online reported that; They stink. They're loud. And, worst of all, they're slow. So goes popular American opinion of diesel-powered autos. But public opinion may be on the verge of a sea change, as a new generation of car consumers -- focused more than ever on fuel consumption and alternative energy -- matures and takes to dealer show rooms.

Indeed, if Americans shouldering the increasingly heavy burden of rising gasoline prices follow the European example, where gas has typically been between two to three times more expensive, diesel -- not gas or electric hybrids -- may forge the path forward.

The advantages of diesel engines to European car buyers are obvious. Besides the lower fuel cost per gallon, the average engine benefits from 30% better fuel economy. In turn, carbon-dioxide emissions -- a figure more commonly paid attention to by European consumers -- are reduced on average by 25%.

MANY MODELS. Maintenance costs may be noticeably lower, too. A Volkswagen TDI model, for instance, only requires oil changes every 10,000 miles, spark plugs are irrelevant, and transmission-fluid flushing is less frequently required as well. All mostly due to the generally lower RPMs of diesel engines.

Europeans got the message loud and clear. Virtually every auto manufacturer offers diesel options on cars in nearly every segment, from the smallest city hatchbacks to the biggest Autobahn-bound luxury cruisers. And despite the reputation for sluggish performance, improvements in direct-injection technology have produced engines capable of healthy power, in the 300-horses range.

By 2004, nearly half of all passenger vehicles sold in Europe were diesel-powered. In the markets most hard-hit by high gas prices -- France and Belgium -- diesels now account for nearly two-thirds of all new cars sold. This year, analysts expect that number to reach 55%, passing for the first time in European history the majority mark. What's more, in the first three months of 2006 alone, 2 million diesel cars have been sold. (Compare that with the mere 120,000 Prius hybrids bought last year, out of 17 million passenger cars sold in the American market.)

HANKY TEST. Peter Schmidt, an independent analyst with the British AID group, which publishes an industry-only newsletter, says the choice was originally one of necessity. "In a nutshell, Europeans would much rather be driving Ferraris and Porches with big gas engines. But because we pay such outrageous amounts in gas costs, at the end of the day, people made a cut in their motoring costs," he said. "Until recently, Americans have been spoiled rotten with gas that costs less than a bottle of good mineral water."

So why hasn't diesel happened States-side? Until federal regulations take full effect this October, American diesel fuel is significantly dirtier than the European version, containing 30 times more foul-smelling, polluting sulfur. New Ultra-Low-Sulfur Diesel, which will be widely available everywhere this fall, cuts that rate by 10 times, making it almost as clean as Continental diesel.

Toyota (TM) is so proud of its clean-burning diesel engines, which are equipped with multiple filters to catch even invisible pollutants, that dealerships offer a special in-showroom demo. The "Toyota Clean Test" consists of a salesperson holding a white handkerchief behind a new model's tailpipe, while prospective buyers are invited to hammer the gas pedal. The test is concluded by examining the still-clean hanky.

GAS POLITICS. Even the Environmental Protection Agency is onboard. In that agency's 2006 fuel economy guide, three of the six vehicles rated with the best real-world gas mileage are diesel-powered. In fact, despite public misperception and limited model availability, diesels tied hybrids among the best picks.

What's more, there may be a foreign-dependence case to be made, with the American public's attention now turned to what President Bush called the national "addiction to oil." Indeed, predictive models created by the U.S. Energy Dept. show that a doubling of diesel market share would reduce American gasoline consumption by 350,000 barrels of oil a day.

Station and model availability are still big issues. Currently only 17 models from major manufacturers are available in the American market. And due to strict emissions standards, those cannot be bought in five states: Massachusetts, Vermont, Maine, New York, and California. And the Maryland-based Diesel Technology Forum estimates that only 42% of American filling stations pump diesel fuel.

DIESEL DREAMS. Nevertheless, new diesel-powered offerings are cropping up in unexpected places, including DaimlerChrysler's (DCX) new version of the Jeep Liberty and Mercedes-Benz's high-end E-Class. That's a notable renewed vote of confidence from the luxury auto maker that once sold 75% of its American cars in diesel-sipping versions.

The growing interest in hybrids may also have a hand in getting American consumers to look towards diesel. Diesel engines get the same or better gas mileage without the price premiums of cars like the Toyota Prius and the Ford (F) Escape Hybrid. Indeed, the business case for cars like the Prius when compared to lower-cost Euro diesels is questionable. Some experts have dubbed Toyota's effort "pale green."

"Today," says Schmidt, "the time is right for a fundamental shift in the American market towards diesel, especially with rising gas prices, better fuel, and growing interest in green energy." He added, "The big players have made it perfectly clear that that's just what they're going after."

Vella is an intern in BusinessWeek's Paris bureau