Has diesel really got a future in the US?

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4 mins read

23 May 2016

This won’t be a great year for US diesel sales.

Last year Volkswagen, Audi and Porsche together had a 75% share of the diesel car and SUV market in the US, but many models have been taken off sale in the wake of the emissions test rigging revelations. In addition, the low price of oil continues to make fuel efficiency a harder sell, with hybrids’ market share also falling. As a result, the Diesel Technology Forum (DTF), which promotes diesel’s interests in the US on behalf of vehicle manufacturers, component suppliers and fuel producers, expects diesel’s US market share this year to drop below the 3% seen in recent years.

In the longer term, however, a different picture is expected to emerge. In fact, according to estimates from both the DTF and Honeywell, a major supplier of turbos to diesel engines, diesel’s US market share could double in the next five years, to around 6%. A rise in fuel prices, especially for the premium petrol that increasing numbers of cars require, could be one factor, but there are other reasons why this might happen.

Light-duty trucks – a category that in the US includes pick-ups, SUVs, crossovers and MPVs – account for more than 55% of the US light vehicle market. More important, ‘truck’ sales are rising as car sales are falling, with the crossover segment in particular exhibiting strong growth. As in Europe, where crossovers and SUVs have eaten into the sales of conventional saloons and hatches, no one expects this trend to reverse any time soon.

Audi developed 'dieselgate' software in 1999

Meanwhile, US fuel economy and emissions standards are tightening. New corporate average fuel economy (CAFE) regulations will see the fleet average economy figure increase to 54.5mpg (US) by 2025, representing roughly a 40% improvement on today’s level. Over the same period, the new Tier 3 emissions standards demand a roughly two-thirds cut in particulate matter and the combination of non-methane organic gases and nitrogen oxides (NMOG+NOx).

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“Crossovers and SUVs are where the action is and will be in the future,” says Allen Schaeffer, executive director of the DTF. “If that’s the case, some vehicles are going to be of a size and shape that makes compliance with future CAFE standards difficult without a lot of compromises. Diesel is attractive because it enables you to maintain the balance of vehicle size, performance and fuel economy better than you might be able to by continuing to tweak gasoline.”

Diesel, then, is shaping up to be part of the solution for car makers with tough regulatory targets to meet and for consumers who want upsized vehicles without downsized performance. Industry analyst IHS Automotive expects diesel’s share of the truck market to hit 7% by 2022, driven primarily by sales of diesel SUVs.

The market is already changing. The Jeep Grand Cherokee EcoDiesel and Ram 1500 HFE (High Fuel Efficiency) come with a version of the VM Motori 3.0-litre V6 that’s also used by Maserati. The Ram alone accounted for an astonishing 63% of all diesel vehicles sold in the US last year. Its maker says buyers like the torque-to-economy ratio; depending on the specification, 15-18% of all 1500s sold are now diesel-powered.

US buyers of heavy-duty pick-ups have long recognised the advantages that diesel can bring. Until recently, theRam EcoDiesel was unique in its segment, but its success is hard to ignore and other car makers are getting in on the act. In the smaller pick-up market, diesel versions of GM’s Chevrolet Colorado/GMC Canyon, which were launched late last year, are selling fast. A recent increase in production means that 10% of Colorados built are now powered by a 2.8-litre Duramax.

GM sees Volkswagen’s troubles as an opportunity to increase sales of diesel cars (a 1.6-litre Chevrolet Cruze diesel will join the line-up early next year) and is keen to ensure that not all diesels are tarred with the same brush.

“‘Diesels are bad’ is the wrong conclusion to take away,” says Dan Nicholson, GM’s head of global propulsion systems. “North America is never going to be like Europe, with a 50% share for diesels, but there is room to grow.”

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Encouragingly for GM and other manufacturers looking to lure disenchanted Volkswagen diesel buyers, research conducted by the DTF suggests that US consumers have identified the emissions scandal as a Volkswagen company problem, not a problem with diesel technology itself. Car makers having to restate their US fuel economy labels is nothing new, either; Hyundai-Kia was fined $300 million in 2014 for overstating its fuel economy claims, for example.

The DTF believes that up to 24 new diesel vehicles could be introduced in the US in the next year, including five new diesel cars, 12 SUVs and seven pick-ups. History suggests that greater consumer choice alone will lead to rising diesel sales, particularly if one of the new models is the Ford F-150 pick-up. Ford won’t confirm reports that a 3.0-litre V6 diesel version of the US and Canada’s best-selling vehicle could be on sale before the year is out, but if it comes, talk of a doubling of diesel’s US market share in five years looks much more realistic.

Graham Heeps