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Diesel Acceptance Faces Many Hurdles

Experts don’t dispute diesel powertrains could capture 15% of the light-vehicle market by 2015 but warn the path to acceptance could be a bumpy one.

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DETROIT – Diesel powertrains are ready for prime time in the U.S., but their soaring popularity in the next eight or 10 years is not a certainty.

At the SAE International World Congress here, a panel of experts from the oil and auto industries, U.S. government and aftermarket do not dispute the potential fuel-saving benefits of diesels nor numerous independent studies suggesting diesel powertrains could capture 15% of the light-vehicle market by 2015.

Nevertheless, almost all agree that high diesel-fuel prices, cost issues and negative consumer perceptions – plus structural fuel-production issues – could make the road to widespread acceptance in the U.S. a bumpy one.

None can foresee a time when diesels might become as popular here as they are in Europe, where about half of all new cars sold are powered by compression-ignition engines.

The massive phase-in of ultra-low sulfur diesel fuel in the U.S. beginning last October has generated much optimism among diesel proponents and suppliers, which say diesels provide 30% better fuel economy and reduce global-warming gasses by a similar percentage.

ULSD fuel allows the latest emission technologies to be implemented so diesels can meet the U.S. Environmental Protection Agency’s newest – and toughest – Tier 2 Bin 5 emissions regulations.

“We’re very optimistic (about the future of diesels),” says panelist Christopher Grandler, deputy director of the U.S. EPA Office of Transportation and Air Quality. “This decade will be known for the transformation of the diesel engine.”

While such clean diesels offer U.S. auto makers a great opportunity to improve the fuel economy of their fleets, panelists point out the new clean diesel technology adds thousands of dollars to the cost of a new vehicle; represents huge investment for auto makers; and will be continually challenged by competing technologies, such as hybrid-electric vehicles and improved conventional gasoline engines.

Perhaps most challenging is the negative impression many consumers still have of diesel engines as being smoky, smelly and trouble-prone.

“We don’t foresee a technology problem with clean diesel; it will be more of a consumer perception problem rather than technology,” Grandler says.

This is not the first time high fuel prices and pressure to improve corporate average fuel economy have sparked interest in diesels. Their popularity took off in 1978, peaking in 1981 when 520,788 new diesel vehicles were sold for a 6.1% share of the market, according to Ward’s data.

At that time, some industry executives predicted diesel’s share would rise far higher, but the first passenger-car diesel offered by General Motors Corp. was a hastily converted gasoline-burning V-8. It quickly developed embarrassing quality and durability problems that tarnished the reputation of all diesels and scared away customers.

Interest waned further when fuel prices dropped. By 1989, only 12,714 diesel vehicles were sold, accounting for less than 1% of the U.S. market.

Many consumers still remember those engines, says a spokesman for the National Institute for Automotive Service Excellence. However, he says if diesel engines become as popular as forecast, the service and aftermarket industry should be able to adapt.

Robert Lee, Chrysler Group vice president-Powertrain Product Engineering, says independent and internal studies show about 15% of U.S. consumers are “very interested” in buying a diesel-powered vehicle, while close to 40% are “somewhat interested.”

Their interest is mostly due to higher fuel economy and by the expectation that light-duty diesel engines last far longer than conventional gasoline engines, which is not an entirely accurate perception.

On the plus side, Lee says consumers still do not fully appreciate how much a diesel engine can add to the residual value of a vehicle.

On the negative side, Lee points out the fuel-tax structure makes diesel fuel cheaper than gasoline in Europe, while in the U.S., diesel can cost $0.60 to $0.70 more than regular gas. That’s a differential that will give potential diesel buyers pause, he says.

Jim Williams, senior downstream manager, American Petroleum Institute, points out that fuel production in North America also is biased against diesels. U.S. refineries are designed to maximize gasoline production through a catalytic cracking process, while European refineries mostly use a different process to maximize diesel-fuel production.

Switching a refinery from one process to another can cost up to $1 billion per refinery, he says, severely limiting the possibility that more diesel-fuel production will be added in the U.S. anytime soon.

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