Automakers hope to rev up sales of diesel vehicles
Drivers in the U.S. are discovering what Europeans have known for years: Diesel engines are powerful and still get eye-popping fuel economy, especially at highway speeds.
Automakers are rolling out new diesels in the U.S. market, including a diesel version of General Motors Co.’s Chevrolet Cruze, which debuts Thursday at the Chicago Auto Show.
Diesels account for just 3% of U.S. auto sales. But automakers see that increasing as they offer more diesel models, part of the effort to meet increasingly stringent federal fuel economy standards.
GM joins Volkswagen, Audi, Mercedes-Benz and BMW in pitching diesel passenger cars for the U.S. market. This year, Jeep will offer a diesel version of its popular Grand Cherokee sport utility vehicle, and Mazda Motor Corp. will offer a diesel version of the new-generation Mazda6 sedan.
The automakers are using versions of diesel engines they have already developed for Europe and other markets.
Diesels now account for about 20% of VW’s sales volume in the U.S. The company welcomes the entrance of new diesel competitors, believing a rising tide will lift all boats.
“This is not a fixed slice of pie that gets divided by the same customers,” said Jonathan Browning, chief executive of Volkswagen Group of America. “This will grow the diesel segment, and that’s good news for us.”
Automakers hope to lure more buyers such as Danny Albarran, a Simi Valley resident who drives a diesel Dodge Ram pickup truck. The Los Angeles City Fire Department engineer learned to appreciate diesels after seeing their reliability and efficiency while driving firetrucks.
“You will see diesel trucks and cars out there regularly get 200,000 to 300,000-plus miles,” said Albarran, who also owns a Toyota Prius. “We rarely have true engine trouble with our firetrucks — none of the issues you see with gasoline engines.”
Even in everyday vehicles, diesel engines provide more power, better fuel economy, a higher resale value and extra longevity, he said.
The resale value of a compact car with a diesel engine is about 63% of its sticker price after three years, according to ALG, a consulting firm that estimates used car values for the leasing business. That compares with 53% for a compact car with a gasoline engine.
But there are drawbacks.
Consumers pay a premium for that diesel engine — from about $2,000 for a VW hatchback or sedan to more than $5,000 for a luxury car or big truck.
Although the fuel economy for a diesel can be as much as a third better than for a gasoline car, oil companies charge more for diesel. Depending on what’s happening in the oil industry, the gap has been as much as 50 cents a gallon over regular-grade gasoline in the last year or so. Diesel has been 20 cents to 30 cents higher for much of the last two years, according to the nonprofit Diesel Technology Forum.
Currently, diesel costs 45 cents, or about 13%, more than regular-grade gasoline, according to the AAA Fuel Gauge Report. About half of all service stations nationwide have at least one diesel fuel pump.
Part of the gap comes from taxes. Federal taxes on diesel fuel are 6 cents a gallon higher than for gasoline, a result of an agreement with the diesel-dependent trucking industry as a way to make up for the extra wear and tear heavy trucks put on the nation’s roads.
A growing number of consumers appear willing to accept that extra fuel expense, perhaps inured by the high price of all automotive fuel, said Allen Schaeffer, executive director of Diesel Technology Forum. Sales of diesel vehicles have risen by double digits in 20 of the last 24 months, he said.
Car buyers “are looking at long-term value,” Schaeffer said.
Americans have historically shunned diesels. That’s because of historically cheap gasoline, compared with other countries, and because the first diesel passenger cars were noisy, smoky, smelly and slow.
“Just recently are we seeing that image begin to change,” said Tom Libby, an analyst with automotive research firm R.L. Polk & Co.