Don't Look For Warm Reception For Diesel-Powered Vehicles

by Karl Greenberg, Jan 29, 2008, 5:00 AM

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This year will see a raft of diesel-powered cars and trucks enter the U.S. market from the likes of Mercedes-Benz, Volkswagen, BMW, Chrysler and Audi.

Their success in this market will depend on consumers rethinking diesel. "Rethink" is the operative term because, although diesel is fuel de rigueur in Europe, U.S. consumers have an outmoded perception of diesel engines as smoggy, clanky and shoddy. They don't see clean, quick and quiet cars.

This month's data suggest that automakers fielding diesels in the U.S. will have to make the river of consumer sentiment run uphill. A new study from KBB.com, the Web-based consumer research and shopping site, says new-car shoppers still see diesel as dirty and noisy. In addition, the latest study shows that shoppers increasingly believe that diesel-powered vehicles get poorer fuel mileage than conventional gasoline engines, and fewer consumers are seeing diesels as fuel-efficient.

The new study shows the vast majority of in-market new-vehicle shoppers do not see diesel as a likely mainstream fuel source in the future. The snapshot study, which KBB does monthly, presents an image of consumers turning their backs to diesel at a brisk rate. The firm assigned a nine-point gap favoring hybrids versus diesel in December. Now the gap, based on survey results, is up to 17 points this month. This is despite marketing efforts like VW's "Diesolution Tour" to promote clean-diesel tech.

Jack R. Nerad, executive editorial director and executive market analyst for Kelley Blue Book and kbb.com, says diesel price plays a role. "The only way I can explain it is that the escalating prices of diesel fuel have soured some people on diesel even more than before," he says. "In essence, in spite of a lot of publicity on diesel, the decline has been stronger." He says the lack of awareness among American consumers about clean-diesel technology such as Mercedes-Benz Bluetec, is worsened by association with "diesel vehicles we see on the road every day."

The study shows that 61% of shoppers said they are interested in hybrids in the latest study, and they are willing to pay a higher premium for them: $3,135, up from an average premium of $2,645 a month ago.

As for what hybrids consumers like: Honda Civic was most popular, followed by Ford Escape and Toyota Highlander. Ironically, Toyota's Prius was near the bottom of the consideration list, with only 12% of respondents choosing it.

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