What's Holding Diesel Back in the U.S.?

What's Holding Diesel Back in the U.S.?

The Cars Are Better Than Ever, but Diesel Is Still a Tough Sell

A few years ago, experts predicted that the days of "dirty diesels" were over, and clean diesels would quickly reach the popularity of hybrids. They looked at the widespread acceptance of diesel vehicles in Europe and figured the same thing would happen here in the U.S. But the diesel revolution never happened. Fuel prices, lack of variety and an inclination toward hybrids kept diesel vehicles relegated to a niche market. But if the new breed of diesels is so good, what's holding them back?

Price of Fuel

According to the U.S. Energy Information Administration, since September 2004, the price of diesel fuel has been generally higher than the price of regular gasoline all year round. They cite three reasons for this: 1) Worldwide demand for diesel fuel has been increasing steadily, with strong demand in China, Europe and the United States putting more pressure on the tight global refining capacity; 2) in the United States, the transition to ultralow-sulfur diesel (ULSD) fuel has affected diesel fuel production and distribution costs; 3) the federal excise tax on diesel fuel is 6 cents higher per gallon (24.4 cents per gallon) than the tax on gasoline.

Although you'll get more energy from a gallon of diesel, many people only look at the price. Depending on the price of diesel fuel in your area, buying a diesel vehicle may feel like having a car that only takes premium fuel — which is as much as 25 cents more per gallon.

Not Enough Variety

While hybrids have become a serious consideration for mainstream shoppers, diesels still only apply to a small niche of shoppers. A person looking for a hybrid vehicle in 2010 has roughly 11 cars, nine SUVs and two trucks to choose from. But for consumers looking for a diesel passenger vehicle, their choices shrink down to four cars and five SUVs. We do not count the heavy-duty diesel trucks because they are considered commercial vehicles. This lack of variety causes its own set of problems, which leads to our next topic.

Vehicle Cost

The least expensive diesel vehicle, a Volkswagen Golf TDI costs more than $22,000. The remaining diesel vehicles are only among the luxury German brands.

Until diesel vehicles cost about the same as a Toyota Corolla, they will be at a cost disadvantage over less expensive gasoline vehicles. While federal tax credits offset this to some degree, it still takes a few years before a consumer breaks even on the sticker price via reduced fuel consumption. And when you factor in the higher price of fuel, it's enough to scare many shoppers away.

Automakers Scrapping Diesel Plans

A few years ago, a number of automakers had plans to bring a diesel passenger vehicle to the United States. But many of them either shelved the plans or scrapped them altogether. We reported a few years ago that Honda was going to change the diesel landscape with its iCTDi engine. That engine never made its way into any vehicles in the U.S.

Additionally, Ford, Nissan and General Motors had diesel plans in the works, but none made it to our shores. Instead, automakers are focusing their efforts on hybrids or electric vehicles. The major deterrent automakers cite is the extra costs associated with making a diesel vehicle emissions-compliant for all 50 states.

Diesel's Reputation

Imagine having an older brother who couldn't keep out of trouble, and as a result other people assumed you were the same way, too. This is the perception the new diesels have to deal with. For better insight into diesel's reputation, ask someone what they first think of when they hear the word "hybrid," then ask them what comes to mind when they hear the word "diesel." Odds are good that you'll get completely opposing replies.

It's no secret that older diesels were dirty, smelly, noisy and slow. And though the new crop of diesels has all but eliminated this, it's been an uphill battle to re-educate consumers. Volkswagen and its "TDI Truth or Dare" campaign are trying to change public perception through a series of viral videos and FAQs on its Web site.

Exhaust Treatment Complexity

In order to make diesels 50-state legal and keep emissions low, automakers needed to add special technology to treat the exhaust. In smaller engines, this is achieved through particulate filters and oxidation catalysts. In larger engines, a urea treatment system must be used. This liquid needs to be replaced at a certain interval, and this added maintenance could deter consumers who aren't willing to deal with the cost or service.

Gasoline Engines Are Closing the Gap

As part of their need to meet strict federal fuel-economy requirements, automakers have had to come up with new ways to make their gasoline engines more efficient. Direct injection and turbocharging technologies have allowed automakers to downsize their engines and close the gap on the fuel economy offered by diesels. Ford has EcoBoost, Hyundai has its GDI engines and General Motors has the Ecotec engine.

This creates a potential situation in which someone considering a Jetta TDI (30/42 mpg) takes a look at the Ford Fiesta (30/40 mpg). When equipped with automatic transmissions, both vehicles have very similar fuel-economy ratings, but the Jetta costs over $4,000 more than the Fiesta. Budget-minded consumers might prefer the smaller Fiesta — not just because it is less expensive, but because they can fill it with lower-priced regular gasoline.

What Does the Future Hold?

Mercedes will soon be bringing out its first diesel-electric hybrid, and other automakers like Mazda will be trying their hands at diesel vehicles in the U.S. But diesel has yet to prove it will ever become a major player in the U.S. market, and each year competing hybrid-gasoline engine technology will make that goal more difficult.

For today's car shopper, it shouldn't matter whether diesel vehicles become a sales success. Though they may cost a bit more than their gasoline counterparts, the diesels currently available provide an excellent and more involving alternative to hybrid vehicles. There are a few things to consider before buying a diesel. But if enough people buy them and share their experiences, that diesel revolution might just happen.

To find a dealership that knows how to treat shoppers right, please visit Edmunds.com's Dealer Ratings and Reviews.

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