Diesel Going Green Could Have Strong Market Potential

My dad is a creature of habit. He stuck to his tailor for years, even after the old man lost most of his eyesight. He always dressed up for dinner and expected the same from his offspring, which was okay with me until I was about eight. He also always drove a car manufactured by Peugeot, buying a new one every five years or less.

When I was born, he allegedly left for Paris, France, and drove back home all the way to Dubrovnik in a brand-new “Peugeot 404,” which in the 1960s was Europe’s equivalent of a “Cadillac.” Also, allegedly, he bought a new car to drive back home from the hospital each time a child of his was born. Since I was the last — and the first girl after three boys — my dad liked having me so much that he vowed to drive a Peugeot 404 as long as they manufactured the car.

As it turned out, Peugeot 404 was manufactured until the late 1980s, eventually giving way to number 504. But I’ll always remember that huge, comfortable car (perhaps it only seemed big to a kid). I’ll also always remember how my dad used to say it cost us next to nothing to run its diesel engine. And I’ll remember the distinct sound it made, like a tractor, as well as how much exhaust a car like that could produce.

So, when I recently read an article about diesel cars making a comeback in the North American market, I wondered, “Has everyone lost their marbles?” Because all I could associate with a diesel engine was noise, exhaust and cheap gas. And while the latter could be popular among consumers, the first two certainly couldn’t.

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But this is only because I forgot that almost three decades have passed since the last diesel Peugeot 404 left the assembly line, and there have been enormous technological improvements since. According to a number of analysts on both sides of the Atlantic, diesels are staging quite a comeback — trying to reduce greenhouse gas emissions considerably; be as energy efficient as hybrids; and yet come with a much cheaper price tag.

Just to give you an idea of the savings from the consumer point of view, consumers in North America are likely to get hit with a premium of at least US$5,000 for hybrids and crossovers. In contrast, European consumers opting for a diesel end up paying a cost premium of about US$2,000.

If and when diesels manage to erase those same images that I’ve conjured up thinking about them, their market potential could be considerable. Analysts predict that in the next five years, diesel sales are more than likely to outpace hybrids, hitting $1.7 million. This is significant not only from the consumer perspective, but from the perspective of the ailing North American car industry, too.