VW sees 'clean diesel' as solution

NEW YORK–Automakers must work to improve fuel efficiency and reduce emissions as they struggle to deal with the toughest economic conditions in more than a generation, Volkswagen's U.S. CEO said Wednesday.

Stefan Jacoby, president and chief executive of Volkswagen of America, told journalists at the New York International Auto Show that these changes won't just come from hybrid and electric vehicles, but also more fuel-efficient gas and diesel models.

"We have to be realistic and honest about the future of alternative fuels," Jacoby said. "We still have challenges in making these vehicles affordable and reliable."

For example, while traditional gas and diesel vehicles have proven themselves reliable in extreme cold and hot temperatures, the same can't be said yet for battery-powered ones, Jacoby said.

And making those kinds of vehicles that reliable could still be years into the future. In the meantime, automakers can still cut pollution and lower fuel consumption by improving the traditional internal-combustion engine, he said.

Jacoby said he's confident that clean diesel vehicles, which currently represent just a fraction of the cars and trucks on U.S. roads, will become more popular with American drivers as they become more educated about their benefits.

Jacoby said drivers can get 20 per cent to 40 per cent better milage with diesel fuel, along with 50 per cent more power. At the same time, diesel vehicles come with a higher sticker price than their gas counterparts and diesel fuel is typically more expensive than gas in the United States.

That's in contrast to the European market where diesel vehicles account for more than half the car population. Dramatically higher taxes on both gas and diesel result in pump prices three to four times higher than in the United States and make the price difference between gas and diesel less noticeable.

Jacoby also called for the U.S. to mandate national fuel economy standards, citing the difficulties for automakers caused by more strict regulations in states such as California.

He also spoke in support of proposed scrappage programs. Jacoby credited Germany's scrappage program with boosting vehicle sales there. The government program offers financial incentives to drivers who buy new vehicles and replace older, less efficient ones

Similar programs have been proposed in Congress and President Barack Obama has said he supports the idea, but they've yet to gain much traction.

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