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Diesel comeback: Model tally set to double for 2014

Paul A. Eisenstein
27 August 2013

MORE AT CNBC.COM

At 46 miles per gallon highway, the new Chevy Cruze Turbo Diesel gives even hybrids a run for their (gas) money.

The number of diesel models on the U.S. market should double during the 2014 model-year, according to various industry-watchers, the high-mileage powertrain technology set to get its biggest boost since falling out of favor with American motorists back in the 1980s.

The surge reflects the advent of new diesel technology that not only maintains an estimated 30 percent mileage advantage over gasoline engines, but also resolves traditional concerns such as noise, roughness and foul-smelling emissions.

It also reflects the return to the diesel market by manufacturers like General Motors, the emergence of new makers including Nissan, and the expansion of offerings by diesel leaders such as Volkswagen and is luxury arm Audi.

"This year, the number of diesels will be doubled," said Andreas Sambal, the North American director of marketing for German supplier Bosch's diesel systems division. "By the end of the 2014 model-year there will be 40 diesels on the market and this will give consumers a lot more choice."

Audi is introducing several diesel-powered models.

Diesels have been a bit player in the U.S. market ever since the late 1980s when American buyers largely abandoned the technology due to endemic problems with earlier diesel designs—and in the wake of major and embarrassing failures of several GM engines.

Since then, proponents of diesel technology have lamented a chicken-and-egg problem. Many manufacturers were reluctant to enter the diesel market because of low sales. But proponents warned that sales wouldn't grow until there were now more diesel offerings. The coming model-year will put their claims to the test.

Nissan this week became the latest maker to announce plans to launch a diesel option for its full-size Titan pickup—a first for a Japanese maker. The 5.0-liter V-8 turbo–diesel will be supplied by Cummins, Nissan noted.

"Truck owners told us there's a demand for the performance and torque of a diesel in a capable truck that doesn't require the jump up to a heavy-duty commercial pickup," said Fred Diaz, vice president for North American Nissan sales and marketing.

Diaz's former employer, Chrysler, just last month announced plans to add a diesel option for the 2014 Ram 1500 pickup. There is speculation GM will soon do the same for its GMC Sierra and Chevrolet Silverado trucks.

But Chevy has already staked out a return to the diesel passenger car market with an "oil-burner" option for its 2014 Cruze sedan. And Mazda will become the first Japanese maker with a passenger car diesel with a new version of its Mazda6 sedan.

Those makers have a long way to go to catch up on the German makers who have spearheaded the diesel revival—notably VW and its luxury arm Audi. A third of the Q7 crossovers the highline brand sells in the U.S. are equipped with diesels and more than half of the old A3 wagons were equipped with oil-burners.

Audi will bump its diesel model count from two to five for the 2014 model-year and will add a sixth when it introduces a new version of the A3.

Diesels have accounted for less than 3 percent of the total US new vehicle market even after recent growth spurts but Bosch forecasts that will reach as much as 10 percent by 2018. That is an admittedly "bullish" forecast, said the supplier's Sambal. But other, more cautious forecasts predict the share could rise to 8 percent or higher.

Notably, diesel sales surged by 24 percent during the first seven months of 2013.

There are still obstacles to increased acceptance, cautioned Nicole Barranco, Audi's diesel lobbying chief, ranging from higher fuel taxes to outdated perceptions by consumers unaware of modern diesel technology changes.

On the other hand, there are some key factors that could help diesel gain traction as awareness grows, said Bruce Belzowski, assistant research chief at the University of Michigan Transportation Research Institute.

For one thing, he noted during a forum sponsored by Audi, there's the roughly 30 percent mileage boost the technology offers. And that, in turn, means that "almost all" diesel models "have a positive total cost of ownership" despite the typically higher purchase price.

A recent study by the institute found that even a small Volkswagen Jetta will save the typical owner about $3,000 over a three-year period while the total cost of buying and operating a Mercedes-Benz GL diesel is about $15,600 less than the gasoline version.

Meanwhile, advocates suggest, more diesels going into production could lower the cost penalty, further improving the appeal of the technology.

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