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Diesel set to outpace hybrid trend in 2013

Published February 15, 2013

In 2013, diesels are the new hybrids.

With an enthusiasm that has been typically reserved for electrified or semi-electrified cars over the last decade, automakers of all colours are now pumping up their diesel-powered passenger car portfolio.

The Diesel Technology Forum, a U.S.-based lobby group, estimates that about 20 new diesel cars will be introduced in North America this year. Many of these models will come from American and Japanese automakers, who have long sidestepped diesel technology in passenger cars. Robert Bosch LLC, a key global supplier of diesel engine components, is betting on this trend and has forecasted about 54 new diesel models for U.S. and Canada by 2017.

European automakers have always held a key stake in this segment. In their domestic markets, nearly 50 per cent of all light-duty cars sold are diesels, backed by different consumer attitudes and heavy government subsidies for diesel fuel. As a result, it always made sense for German automakers to push diesels in North America and they have been largely successful in their efforts.

In Canada, about 30 per cent of Volkswagen customers choose a diesel variant while about 80 per cent of Mercedes-Benz’s M-Class sales feature a diesel powertrain. BMW is also set to bring a diesel version of its 3-Series sedans while Audi has committed to similar options for A4, A6 and Q5 in 2013. Even Porsche introduced its first diesel to Canada last fall, in its Cayenne.

But what really changes the game this year is the re-entry of American automakers in the diesel arena. The Detroit Three largely abandoned the technology — except for in pickups and markets outside North America — back in the 80s when diesel cars had a bad rap for being noisy, smelly and sooty.

Now, General Motors has unveiled the Chevy Cruze Diesel and is hoping it will make the slightly sour taste of the Volt go away. There may be a diesel Cadillac on its way as well. Chrysler is also equipping its popular 2014 Jeep Cherokee with a diesel engine. Ford’s the only one keeping its distance for now.

Among the Japanese, Mazda is poised to bring a diesel version of its SkyActiv engine. Honda has been making a lot of noise with downsized diesel engines in Europe and it could just be a matter of time before they cross over to our shores.

Diesel’s not a dirty word anymore and the gradual image makeover has enabled the latest surge. Automakers have carefully prefixed the technology as “clean,” to emphasize its fast-evolving emissions efficiencies. Coupled with greater fuel mileage and high residual values, the current batch of diesel cars makes a strong case for themselves.

But consider the case against them. The engine premium is quite high compared to even turbocharged gasoline varieties and can range upwards of $3,000-$4,000. Moreover, diesel still gets little love from North American governments, unlike in Europe, which means that there is little visible incentive for vehicle owners to switch over.

Diesel’s “clean” rebranding efforts also took a beating recently. A study released by the British Department of Energy has found that diesel fumes continue to be more damaging than gasoline emissions, leaving the Queen’s government a little red-faced over all its efforts to drive diesel adoption. Last year, a report by the World Health Organization made similar claims.

All probable reasons why Volkswagen executives have publicly stated that they welcome the added competition in North America. It may seem counterintuitive but a full-on push from American and Japanese automakers might just be the tipping point that German automakers have been looking for all along.

In fact, automakers such as Volkswagen and BMW may be the bigger gainers from the increased visibility, as consumers are more likely to opt for a diesel Jetta or Golf than a Cruze, as the former models have been around longer and have firmly established their credentials.

Diesel sales have shown strong growth in the last two years and most forecasts that I have seen remain positive. Canadians have been slightly more welcoming than Americans, as diesels accounted for about three percent of all car sales in 2011, compared to about 1-2 percent south of the border. In Canada, that figure is expected to surge in the next few years and diesels may hit 10-15 percent of all car sales by 2020.

That might be bad news for hybrids.

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