Brighter, cleaner outlook for U.S. diesels

Roland Jones Business news editor • Profile • E-mail

News that Nissan plans to introduce a diesel version of the Maxima in 2010 may leave a lump in the throat of baby boomers who remember the noisy, smelly, smoke-belching Oldsmobiles that clogged American air in the 1970s.

But those drivers can breathe easy. Like retro fashions, diesel is making a comeback, but it is no longer the dirty fuel of three decades ago.

Nissan’s plans for a new Maxima is just one example of a move to cleaner, fuel-efficient diesel vehicles that could offer motorists a surprising solution to the problem of high gasoline prices, analysts say.

Today’s diesel engines provide 25 to 35 percent better fuel economy than typical gas engines, and thanks to new federal regulations that came into effect last year requiring the use of low-sulfur diesel, they are also much less harmful to the environment than in the past, when many states, including California and New York, banned their sale.

All these factors are driving automakers to take another look at producing diesel-powered passenger vehicles, said Walter Copan, vice president and chief technology officer of Clean Diesel Technologies, a developer of clean fuels.

“When GM tried to make a big push for diesel it was a big flop, both technically and performance-wise, so the image of a smelly, high-polluting and unreliable vehicle was well deserved,” Copan said, referring to the 1970s.

“But that was 30 years ago,” he said. “In the last few years there has been a renewed awareness in the United States of the volatility of fuel prices and a focus on climate change, so increasingly there’s now a push by automakers for more fuel-efficient fleet averages. These are the things that are going to bring the increased application of diesels in the marketplace in the future.”

In Europe, where many countries encourage the use of diesel through lower taxes, diesel vehicles account for 50 percent of all automobile sales, compared with just 1 percent in the United States. Diesel also is not as widely available in the United States, and sometimes the price of diesel exceeds that of gasoline, although currently diesel is about 15 cents a gallon cheaper on average.

Jesse Toprak, executive director of industry analysis for Edmunds.com, an automotive Web site, reckons that over the next few years, diesel sales in the United States could rise to 5 or 10 percent of all auto sales. He said automakers need to get ahead of the trend, just as Toyota did with its popular gas-electric Prius hybrid.

“Automakers can’t ignore diesel, or they will be asking themselves why in a few years if diesel takes off, just as they did when the Prius became so popular,” Toprak said. “It’s all about getting ahead of the curve. When you get into making cars that use alternative fuels you are taking a risk, but the risk is that gas prices will go down and you might find people are more interested in gas-powered cars again. Realistically, that’s not likely to happen.”

An important ingredient in the adoption of diesel-powered cars is their ability to use bio-diesel  made from biological sources such as vegetable oils, said Toprak. If carmakers give drivers the option of saving money on fuel and also the option of being “green,” they will tap into a growing niche market, he said.

“The trick is to convince people that this is not the old diesel,” said Toprak. “They can appeal to a lot of environmentally conscious people as well as those who want to save on gas. After all, the early adopters of the Toyota Prius were mostly interested in making a statement about the environment (rather) than saving money, because back when the Prius first came out buying one made no financial sense at all because of the premiums you paid.”

Diesel may have a leg up on ethanol, a fuel made from renewable plant sources like corn, wheat and sugarcane that some automakers have promoted as a green alternative at the pump. The most common use of ethanol by American drivers is in E85 — a mixture of gasoline and ethanol with up to 85 percent ethanol by volume that can be used in specially modified engines.

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