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More Diesels Planned For U.S.

NEW YORK -- In a climate of soaring oil prices and concerns about global warming, automakers are using the New York International Auto Show to bolster their green credentials with a technology that many remember as dirty and smelly.

Honda Motor Co., Nissan Motor Co., Mercedes-Benz, BMW and Chrysler LLC are among the automakers touting their plans to bring more diesels to the U.S. market. ."I don't think any of us should be under illusions that there (isn't) a fair amount of baggage with diesels in the United States," said Tom Purves, BMW's North America chief.

BMW will be among the first to sell diesels in all 50 states under new diesel rules that call for cleaner fuel and tighter emissions standards. Beginning in October, the German automaker will market a diesel X5 SUV and a 3 Series sedan. The company doesn't expect diesels to account for more than 10 percent of U.S. sales in five years.

Acura will begin selling a diesel version of its new TSX in 2010. Nissan will bring a diesel version of its redesigned Maxima to market in 2010.

"It's an experiment," said Al Castignetti, Nissan Division's North American general manager. "If it's readily acceptable and people say it's great, where's the limit?"

Volkswagen of America plans to introduce two diesel versions of the Jetta later this year -- a sportwagon and sedan. Dealers will receive one on June 1 to offer test drives and generate interest.

J.D. Power and Associates has forecast that diesels will account for 14 percent of the U.S. auto market in 2017, up from 3 percent today, driven by high fuel price and strict tailpipe emissions limit.

In Europe, diesels account for about half of all auto sales, in large part because of higher taxes on traditional gas-powered vehicles.

But diesels face significant hurdles in the United States. There is far less refining capacity and diesel fuel averages $3.97 a gallon, up 48 percent in the last year, according to the Energy Information Agency. Unleaded gasoline prices average $3.28 a gallon, up 22 percent in the last year.

Jim Hossack, a diesel expert at AutoPacific Inc., said that while diesels have a great future, the rising cost of fuel will play a role in their growth in the U.S. market.

"What used to be a great deal is not such a great deal anymore," Hossack said. "The big question in whether diesels will see the growth over the next decade are two variables: the cost of diesel engines and the fuel."

Although they are more costly to produce, diesel engines get about 25 percent better mileage than traditional gas-powered engines. Automakers see diesel as a key part in meeting a new federal requirement that will boost fleetwide fuel efficiency by 40 percent to 35 miles per gallon by 2020.

To tout its diesel engine, Mercedes-Benz opened a temporary "House of Bluetec," -- a play on the House of Blues chain of live music venues -- at the New York auto show. Singer Sheryl Crow entertained Tuesday night.

The German company has had success with its four U.S. diesel models, since introducing them here in October 2006. But it has only been able to sell its three diesel SUVs and the diesel E320 sedan in 42 states -- excluding California and seven others -- because of their more stringent emissions rules. But Mercedes will start selling its three diesel SUVs in all 50 states in October. The SUVs are the ML 320 Bluetec, RL 320 Bluetec and GL320 Bluetec, each gets between 20 and 40 percent better fuel economy.

Chrysler has a diesel version of its Jeep Grand Cherokee available but lowered the price last year to boost sales. The company reduced the price by $1,000 -- still between $1,010 and $3,265 higher than the gasoline versions. The diesel version gets 30 percent better fuel economy and reduces carbon dioxide emissions by 20 percent.

Toyota has been slow in the U.S. market to offer diesels, preferring to focus on hybrid technology. Toyota will offer a diesel in 2010 on some of its largest trucks.

General Motors Corp. also has taken a cautious approach with diesels.

While GM produces full-size diesel pickup trucks and vans, the automaker hasn't announced any plans to expand diesels to passenger cars. GM is working on other truck applications and last year announced it was investing $69 million in its joint-venture Ohio diesel engine plant.