The Return of the American Diesel Car
The following guest essay is by Paul Nash, a regular reader here at R-Squared. Paul is an Australian who now lives near Vancouver, Canada. He is an environmental engineer who specializes in doing municipal water and energy efficiency projects, and has had experience in managing small town water and energy utilities. He is also developing small renewable electricity projects – micro hydro and wood biomass – neither of which is in short supply in his part of the world. Paul is also a strong proponent of high efficiency automotive engines and alternative fuels, and takes particular interest in the efficiency and multi-fuel capabilities of diesel engines, which is what prompted this essay.
There hasn’t been an American made, diesel powered passenger car since the Oldsmobile diesels of the 1980’s, and few people, including GM, have mourned the passing of those old heavy, smoky, loud and slow beasts. For those car drivers who want a diesel, the only option since then has been the venerable Volkswagen diesels, the various iterations of the Jetta, Passat and Golf.
But that is set to change. General Motors’ top selling compact car, the Cruze, is available in overseas markets with the option of a 2L turbo diesel engine. The first rumors surfaced in February that this diesel version might be sold in the US, though GM refused to confirm anything. It was then reported earlier this month that a decision had been made, though again, no official word.
Well now it is official, as GM’s CEO, Dan Akerson has just confirmed that GM would start selling the diesel version of the Chevrolet Cruze in 2013.
“I drove it the other day. It is great,” Akerson said in an interview with USA TODAY. “These new diesels are quiet. Should make it in the low- to mid-40s, and that’s with an automatic,” the CEO said, referring to the likely fuel economy rating with an automatic transmission.
Winds of Change at GM
Clearly, this is quite a change for GM, who have consistently refused to bring any diesel passenger cars into the North American market, even though they make and sell them all over the rest of the world. Akerson even acknowledged as much, regarding alternative fuel vehicles: “We’re going to introduce battery-only vehicles…CNG vehicles. Stay tuned. This is not the old GM.”
So why the change? Well, clearly GM sees an opportunity. Volkswagen has seen an increase in diesel sales this year to 22%, compared to past averages of 12-14%. Sales of diesel cars in the US have typically been around 1% of all sales, but have been trending up recently, with May 2011 seeing a 34% increase compared to 2010 (source). And the Cruze has been a surprisingly good seller, both in the US and around the world. Last month it was the top selling car in the US, outselling everything but the F-150 truck.
Versions, Price and Mileage
So this would seem like a good time to put 2 and 2 together, but what will the diesel Cruze be like, how will it drive, what is the mileage, and, most importantly, how much extra will it cost?
As is often the case, if you want to see how things should be done in America, be it cars, beer, or the Olympics, you only need to look to Australia. There, the Cruze is built by GM’s Australian division, Holden, and the current model diesel has been on sale since March 2011.
There are three versions available, with the two gasoline engines being the same ones used in North America;
Using the current average US prices of $3.64 for gasoline, and $3.90 for diesel the annual costs will be $1,631 (1.8) $1,467 (1.4) and $1,376 (diesel). So the diesel will save $255 per year over the 1.8 and $91 over the 1.4.
For the Australian cars, the base price is $20,000, with $2,000 extra for the 1.4 and $4,000 for the diesel. The US pricing starts at $16,500 for the 1.8, is a $2,000 upgrade to the 1.4, and expect the same $4,000 for the diesel. $2,000 extra would get you an automatic transmission for any vehicle.
According to the Australian reviews, both the 1.4 and the diesel are great cars to drive, with the diesel having slightly better acceleration. The higher power and torque of the diesel make it the better bet if you are likely to be carrying four people, or larger people, or towing anything. Towing capacity ratings in Australia are 1500lb unbraked and 2500lb with trailer brakes. In Canada, it is 1000lb max, and, in the US, there is no listed towing capacity. I suspect this has more to do with the number of lawyers in the respective countries than anything to do with the car itself.
Diesels have always been more fuel efficient than gasoline vehicles, though versions like the ECO are narrowing that gap. It is worth noting that to maximize the mileage of the gasoline ECO, it has had some weight reductions and aerodynamic improvements, plus low rolling resistance tires, compared to the standard and diesel Cruze.
Given the good mileage of the ECO, there may not seem to be much of a case for the diesel. But, as is the case in Australia, the diesel will likely appeal more to people in rural areas, and those who do lots of driving as part of their job. For drivers who do over 25,000km (15,500 miles) per year, the fuel savings start to really add up, and the greater longevity of diesel engines lead to higher resale values.
Diesels still have a long way to grow in the Australian market; diesel cars (not including SUV’s) were 7% of 2010 sales, up from 4% in 2007 (source). More interestingly, in the ever-growing SUV market, diesel sales have doubled from 2007 to 2010, and market share has gone from 24 to 34%. If diesel SUV’s were available in the US market, it might help to maintain sales of these high margin vehicles. There are numerous other cars, SUV’s and pickup trucks common to both the US and Australian (and other) markets, where diesel variants are available, so some of these could be introduced into the US market with relatively short lead times.
I think this is a positive step for GM. They finally have a good compact car, a good diesel engine, and a small but growing number of buyers that are looking for real fuel efficiency. The Cruze diesel delivers that – without the expense of a hybrid drivetrain, and, critically, with an improvement in the driving experience over its gasoline model.
In the country that has the most cars, and drives the most miles, diesel vehicles offer potential to make a real impact on national oil consumption. And with fuel efficiency rising in importance to buyers, car companies, and government, the timing may finally be right for a revival of diesel cars – may we see more of them.
- For those who want an inside edge in the energy sector.
- Written by veteran energy analysts and insiders with a track record of accurately predicting trends.
- 100% FREE!
- And Much More...
Total Energy USA Conference and Exposition
November 19-21, 2013 - Houston, TX
Platts Global Energy Outlook Forum
December 12, 2013 - New York, NY