AppId is over the quota
AppId is over the quota
By Danny King October 24, 2011
General Motors' plans to offer a diesel version of its popular Chevrolet Cruze compact will give diesel advocates a reason to forecast vehicle counts not seen in the U.S. in at least two decades. But it also raises questions about the financial viability of offering a diesel engine in a budget-priced car, and the potential for U.S. customers to embrace a technology that previously had mixed results. GM said in late July that it would start offering a diesel Cruze in 2013. The automaker did not provide details on price, engine specifications or fuel economy, but the model is expected to at least match the EPA-rated 42 miles per gallon highway fuel economy the 1.4-liter Cruze Eco gets. GM hasn't sold diesel-powered cars in the United States since it offered the powertrain on some of its Chevrolet, Oldsmobile, Cadillac and Buick sedans in the 1980s.
GM, which started selling its Chevrolet Volt extended-range plug-in hybrid in the U.S. late last year, said last fall that it may start developing diesel-powered cars, and was considering a "wide variety of offerings," GM spokesman Dan Flores said at the time. GM representatives declined to comment on the automaker's rational for developing the diesel Cruze, and would only say in last month's statement that it would provide additional details about the model "at a later date." GM, which offers a diesel option on heavy duty versions of its Chevrolet Silverado and GMC Sierra pickup trucks in the U.S., has also been including smaller diesel-versions of its Ecotec four-cylinder engine for its Europe-based Opel badge, and includes an option of a twin-turbo CDTi Ecotec engine on its Opel Insignia overseas.
Joining Germans
Still, the company's decision to enter into a U.S. diesel-passenger car market that's currently exclusively the domain of German automakers such as Volkswagen and Mercedes-Benz may help push diesel vehicle counts to levels not seen domestically since the 1980s, some analysts say. North American passenger-car diesel sales will jump from the approximately 100,000-unit level now to as many as 700,000 vehicles by 2017 or 2108, according to Kaushik Madhavan, global program manager for the research firm Frost & Sullivan's automotive and transportation practice, and those numbers didn't factor in the Cruze decision. Madhavan called GM's decision a "both surprising and a positive move."
The decision also is good news for those people who have touted diesel as a fuel that could cut foreign-oil dependency by providing superior fuel economy to gas-powered cars while being flexible enough to run on fuels such as domestically-produced biodiesel, natural gas and, in some cases, synthetic diesel. "I think they have huge potential in that space," said Allen Schaeffer, executive director of nonprofit diesel education and advocacy group Diesel Technology Forum, in an interview with AutoObserver. Since introducing so-called clean-diesel models to the U.S. market about five years ago, VW and Mercedes-Benz "have all demonstrated convincingly the product success with the new generation clean diesels, and they have plowed a lot of ground in raising general awareness of the new generation of diesel."
GM's decision to mass-produce a Cruze diesel could be a further boost for a U.S. diesel-car market that still represents about 1 percent of total domestic vehicle sales. Volkswagen said earlier this month that diesels accounted for about a quarter of its more than 25,000 vehicles sold in the U.S. in August. Audi sold more than 850 diesel A3s and Q7s. Mercedes-Benz sold 851 diesel vehicles in August while year-to-date diesel sales doubled from a year earlier. BMW didn't break out diesel sales. All told, the German automakers sold almost 8,000 diesel passenger cars and SUVs, or less than 1 percent of the 1.07 million light-duty vehicles sold in the U.S. in August.
Price Sensitive
Granted, for a car whose current base sticker price is $16,525, GM faces the challenge of bringing down the cost of diesel engines enough to still make money on the Cruze, even by using the engine it employs in its European diesel Cruze (left). Frost & Sullivan's Madhavan estimated that diesel engines tend to cost about $4,000 more than their gas-powered counterparts, and relatively low production volumes make it difficult to close that gap. Further complicating the issue is the memory of potential U.S. car buyers who can recall the relatively slow, smoky and clattery diesels GM put out during the Reagan era. All this would be for a model that in August surpassed 20,000 units sold for the fifth straight month and pushed GM's August vehicle sales up 18 percent from a year earlier. "The European diesel is very good and would not hurt the Cruz's reputation and in fact would probably be positive," said David Cole, chairman emeritus at Center for Automotive Research, in an interview with AutoObserver. "The challenge is that the base diesel engine is roughly twice the cost of the gasoline engine."
Some say the higher price is worth it, though. Carnegie Mellon University’s Tepper School of Business put out a January report funded by Robert Bosch saying car owners who pay extra for diesel variants get paid back within 18 months because of the combination of better fuel economy, lower maintenance costs and a longer average vehicle lifetime. Europeans appear to have taken that information to heart, as diesels account for about half of the passenger cars sold, up from about 20 percent a few years ago.
New Breed
Indeed, the Germans, whose U.S. diesel models include the VW Golf, Jetta and Touareg and Mercedes-Benz's E350, ML350 and R350 "Bluetec" variants, appear to be gradually overcoming the old "slow and smokey" perception in the U.S., albeit at a higher price point than the Cruze. Audi, which sells both four-cylinder gas and diesel engines of its A3 hatchback, originally bet that about 20 percent U.S. customers interested in the A3 may be willing to pay the extra $3,000 for the diesel version that gets about 10 miles per gallon more than the gas version but has about 60 fewer horsepower. The German automaker bet right as the A3 TDI, which beat out hybrids such as the Toyota Prius and Honda Insight for the 2010 Green Car of the Year by Green Car Journal magazine at the Los Angeles International Auto Show in late 2009, outsells its gas-powered counterpart by about a two-to-one margin.
As a result, Audi will likely start selling at least two new clean-diesel models in the U.S. during the next couple years because of success with its turbodiesel-powered A3 and Q7 cars, Audi of America's Brad Stertz said in a Los Angeles panel discussion last October. Even the Japanese, which have steered clear of diesels in favor of hybrid and electric-drive vehicles as a way to boost their fleets' fuel economy, may start jumping into the diesel fray. Mazda, which will debut its more fuel-efficient Sky direct-injection gasoline engine in the Mazda3 by next year, will offer a diesel version about 18 months after the gas version is launched.
What may also push diesel is the 54.5 miles per gallon corporate average fuel economy (CAFE) standard U.S. regulators and global automakers agreed to enact for 2025. That would be equal to an EPA "window sticker" fuel economy rating of about 40 mpg, or about 78 percent higher than the 22.5 average mpg achieved by automakers for the 2010 model year. "By bringing the Cruze diesel option, GM's confident that clean diesel cars can compete with hybrids and other technology choices," said Diesel Technology Forum's Schaeffer. "With the upcoming fuel economy requirements, this announcement may be the first of many from OEMs who see the inherent efficiencies in the diesel as being an important tool in the toolbox of technology solutions, fortunately one that consumers are taking to quite nicely."
Danny King: is a frequent contributor to AutoObserver.com.
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