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January 15, 2019   |   Diesel Technology Forum

Policy Insider

We Know Where We’ve Been, But Where are We Going?

We asked Alan Baum from Baum & Assoc., a leading industry analyst, to pull out his crystal ball and provide some insights as to how sales of diesel cars, SUVs and pickups may fare in 2019.


2018 saw strong sales of diesel cars and pickups.  This month, we asked Alan Baum from Baum & Assoc., a leading industry analyst, to pull out his crystal ball and provide some insights as to how sales of diesel cars, SUVs and pickups may fare in 2019. 

Recent Sales Results

U.S. diesel sales for Calendar Year 2018 for light-duty vehicles (Class 1-3) reached their highest annual level at over 500,000 units or just over 3 percent of total sales. This share exceeded hybrid sales which came in at almost 2 percent of sales as well as the sales of plug-in electrics (plug-in hybrid plus full battery electric vehicles) which also came in at around 2 percent of total sales. 

The strong sales of diesels were based on record sales of the underlying products using these powertrains. Class 2 and 3 pickups have and continue to be the largest users of these engines with Ford, GM, and Ram all providing significant volume. While Ford’s Super Duty leads the category, the greatest increase in 2018 occurred in GM’s Silverado and Sierra with growth of over a third. For the category as a whole, the overall growth rate was 12.5 percent. As compared to 2015, growth for the three-year period (not annualized) is at a very strong rate of 35 percent, with the strongest growth in 2017 and 2018. 

Ram is in the midst of a long-term effort to improve its position in ¾ and 1 ton pickups and will continue this effort as new versions of these vehicles become available in 2020 and beyond with additional production capacity made available in both Warren, MI and Saltillo, Mexico (the latter of which also produces Class 4 pickups).  GM also has enjoyed strong growth in their product sales in 2017 and 2018.  These products will be updated in Summer 2019, building off the update of the smaller ½ ton versions that are now in the market. Note that GM’s strategy is connected to new product in Class 4 and 5, with the idea that there is value in offering a full product line (particularly to large fleet customers) so that customers can have a “one-stop shop” to satisfy their vehicle needs from cargo vans, ½ ton pickups, all the way to the largest pickups and vocational trucks.

It should be noted that the improved fuel economy enabled in large part by diesel technology is a critical advantage for buyers of these products since these trucks are considered investments and operating costs are critical. Resale value is also strong, which helps justify the increased purchase cost of trucks with a diesel engine. These products have been introduced and improved in response to regulations adopted by the EPA and NHTSA in 2016 that in fact were supported by both powertrain and vehicle manufacturers.

Diesels in other vehicles peaked in 2015 with placement of smaller engines in BMW, VW (including Audi and Porsche), GM, FCA, Ford, Daimler, and Jaguar Land Rover. Of course, volumes have dropped since reports came forward concerning emissions released in regular usage from VW Group vehicles.  Sales from these vehicles dropped in 2016 and 2017, although there was modest growth in 2018, albeit down 45 percent from its 2015 peak.  Sales from these vehicles did increase in 2018 by 9 percent as compared to 2017. 

In the U.S. market, VW is mostly moving on from diesel engines in their products although they did sell 11,500 units in 2017 and 4,500 units of new vehicles in 2018 from vehicles that received software upgrades which allowed them to be sold. These volumes were of course well below strong sales of almost 100,000 units in 2014 and almost 70,000 in 2015.

Going Forward

Ford, Daimler, GM, FCA, BMW, and Jaguar Land Rover will continue to offer diesels to their customers.  Ford is currently the volume leader and is likely to maintain that position going forward with its 3.2L 5-cylinder Power Stroke in the Transit (available in the U.S. since 2014) and the 3.0L 6-cylinder Power Stroke (nicknamed the Lion and developed with PSA) that premiered in the Ford F-150 in Spring 2018. 

But in 2019, both GM and Ram will launch/re-launch their own products to compete with the diesel version of the F-150. Ram’s EcoDiesel (which launched in 2014) has been out of the market for much of 2017 and 2018 as Ram has transitioned from its current DS Pickup to the new DT Pickup now being produced in Sterling Heights, MI. GM has already launched its updated Silverado and Sierra and will join Ram in offering its own 3.0 liter inline six cylinder that will be marketed under the long-standing Duramax name. The new Ram Pickup is a particularly strong entry with a class-leading interior, which should lead to strong sales of both the underlying product and the diesel variant.

That said, a potential economic slowdown (more likely in 2020 than 2019 although we may see a decline in sales late in 2019) may result in a decline in pickup sales as fleet buyers reduce purchases if they see an economic downturn on the horizon.

To date, vans have been the vehicle segment with the largest diesel engine share in ½ ton vehicles, but as noted above the growth in diesel fitment in the ½ ton pickup segment will swamp the vans in volume.  While diesel engines are and will be available in some crossovers, sport utility vehicles, and small pickups, the volume in these categories is modest, particularly as compared to the pickup and van categories.

Summary

While diesel usage in smaller vehicles has obviously been affected by the Volkswagen emissions settlement, demand in pickups and vans remains strong. VW has clearly changed their focus in North America, as diesel was to be a particular focus of their effort to grow market share. Instead, they are moving quickly to establish their position with electrified vehicles, ranging from mild hybrids (including 48 volt lithium batteries) to hybrids, plug-in electrics, and battery electric vehicles.

2019 is an important year for the use of diesel engines. While new products are focused on the Ram pickup and Silverado/Sierra (all in ½ ton versions), sales will continue to be led by the ¾ and 1 ton versions of these pickups. It should also be noted that sales of these vehicles are dependent upon strong sales of the underlying vehicles. While it is expected that total sales will decline in 2019 and beyond as compared to 2018, most industry analysts expect strong sales. Baum and Associates forecasts sales of 16.8 million units which remains a strong result. Baum and Associates also provides alternative sales forecasts; the optimistic scenario for 2019 is 17.4 million, while the pessimistic scenario is 16.2 million units. Clearly, this range of sales would be reflected in the sales of vehicles with diesel engines.

 Data and analysis provided by Alan Baum, Baum & Associates

Check out the full data for diesel vehicle sales in 2018 on our Vehicle Sales Dashboard at www.dieselforum.org/vehiclesales/



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Ezra Finkin
Director, Policy
efinkin@dieselforum.org
301-668-7230

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