BUSINESS

Diesel cars: greenest on the road?

NANCY MACDONALD July 2 2007
BUSINESS

Diesel cars: greenest on the road?

NANCY MACDONALD July 2 2007

Diesel cars: greenest on the road?

NANCY MACDONALD

Mention diesel engines to most North Americans and it conjures images of noisy, smoke-belching trucks of the past. But all that may soon change. According to analysts at UBS Warburg, by 2008 North American consumers may come to see diesel as the most promising technology for improving fuel economy and reducing greenhouse gas emissions. That, in part, may be why even diesel laggards like Toyota have recently announced plans to beef up their diesel offerings.

A surprising new report co-authored by Swiss bank UBS and the British consultancy Ricardo suggests diesels may be just as energy efficient as gas/electric hybrids, and come at a better price. Diesels offer 30 per cent better mileage than their gasoline counterparts, the equivalent of or better than hybrids. UBS says diesel’s biggest advantage comes at the dealership: hybrid buyers take a hit of around US$5,000 for a mid-sized car, and almost $8,000 for a crossover, like the Lexus LX400h. In Europe, the cost premium for a diesel runs an average $2,000 compared to gas models.

Diesel already dominates Europe, where they make up more than half of all cars sold. They are gaining popularity in India and South Korea, but they’ve barely penetrated North America, the world’s biggest car market. But UBS expects that will change by 2008, as consumer options grow. Volkswagen, which sold 20,000 diesels in 2006, is the current American pacesetter. Next-best Mercedes sold 7,000 diesel cars in theU.S. last year, an increase of 60 per cent over 2005. Its highend competitor, BMW, is planning to launch a diesel car in the U.S. in 2008; Honda is promising one by 2009; and Nissan has announced a diesel version of their Maxima sedan will hit North America by 2010.

By 2012, as worldwide concern over global warming increases, UBS predicts diesel sales will hit 1.7 million, outpacing hybrids’ predicted sales of 1.5 million. First, though, it must overcome its image problem. The humming, Hollywood-friendly Toyota Prius hybrid screams green. The diesel VW Golf? Not so much. M