Diesel Car Sales Seen Peaking in Europe


PARIS - Sales of diesel-powered vehicles may be peaking in Europe as stringent emissions laws push up prices, but the popularity of the engine is likely to increase in other parts of the world, auto industry executives said.
"We see sales flattening out (in Europe), mainly driven by cost and cost of meeting new emissions standards," Roger Johansson, vice president of General Motors Corp.'s powertrain operations in Europe, told Reuters.
Diesel engines now power about half of Europe's new cars, rising from a market penetration of about 32 percent in 2000. The vehicles cost about 2,000 euros (US$2,500) more than gasoline-powered cars, but typically get 30 percent better mileage.
But the price of the cars and the cost of producing them have been rising in Europe as automakers have to invest in advanced technology to meet stricter emissions standards for diesel engines, which have higher exhaust levels of nitrogen oxide (NOx), a greenhouse gas.
Dan Morris, Mazda Motor Corp's sales and marketing chief, said the fuel efficiency of diesel engines and its higher performance benefits should increase the popularity of the vehicles in other auto markets.
"I think diesels have room to grow globally," Morris told Reuters in an interview on the sidelines of the Paris auto show.
Industry analysts also see the pace of growth of diesel engines in Europe slowing but sales gaining pace elsewhere.
Global demand for diesel light vehicles is expected to nearly double over the next 10 years, increasing from 15 million sales in 2005 to 29 million in 2015, according to J.D. Power and Associates.
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The auto consulting and forecasting firm said in a recent study that share of diesel vehicles in western Europe is expected to peak at below 60 percent of the new vehicle market.
"South Korea and India are key markets for diesel growth in Asia and the market in China is continuously developing," Alastair Bedwell, analyst at J.D. Power and Associates, said in the report.
Global carmakers are also eyeing United States, the world's largest vehicle market, for their diesel offerings.
Honda Motor Co. recently said it has developed a new and simple diesel powertrain that is as clean as gasoline-fuelled cars, unveiling plans to mount it on a car for the US market by 2009 and later to other regions.
DaimlerChrysler AG and Volkswagen AG, which sell an array of diesel cars in Europe, are also preparing next-generation diesel cars for 2008 US launch.
Klaus Maier, sales and marketing chief for Daimler's premium arm Mercedes Car Group, said Mercedes-Benz could meet or surpass the 15 percent market share that diesel was expected to have in the US premium segment by 2015. It also is stepping up its diesel campaign in other non-traditional diesel markets such as Japan.
Volkswagen is expected to remain the largest global supplier of diesel-fuelled light vehicles, followed by Ford Motor Co., according to J.D. Power. Toyota Motor Corp. is forecast to be the fastest-growing global diesel new-vehicle provider from 2005 through 2015, the group said. (Additional reporting by Michael Shields and Chang-Ran Kim)
Story by Poornima Gupta