Down goes diesel

After years of rising sales, the diesel engine's days of dominance in western Europe appear headed to an end.

Through six months, 45.9 percent of the 6,979,342 new cars sold in the western Europe were powered by a diesel engine, according to the European auto manufacturers association, ACEA. This is a big drop from the 52.7 percent share that diesels commanded at the end of 2008 and another step down from their peak share of 53.3 percent at the end of 2007.

Why the sharp decline?

One of the main reasons is that sales in the major European markets have been altered by incentives that encourage people to trade in their old cars for newer models.

Most of the cars that are being bought with scrapping cash from the government have been minicars and subcompacts.

It seems pretty obvious that most of the people doing the trading would be reluctant to spend the extra 2,000 euros to 3,000 euros to get a diesel instead of a gasoline powertrain.

Why would they? Doing this would just wipe out all or most of their subsidy.

Alternative powertrains

Unlike diesels, cars with alternative powertrains are benefiting from government incentives.

In countries such as Italy, incentives of up to 3,500 euros are given to people who buy vehicles that run on liquid petroleum gas. Those who purchase a car or a van that operates on compressed natural gas can receive 1,500 euros to 3,500 euros in Italy.

The rising sales of LPG and CNG cars in Italy will not have a dramatic effect on the total diesel share in Europe this year. But if the incentives turn former diesel drivers into LPG and CNG fans then this could have a more severe long-term effect.

Diesels also face a growing challenge from hybrids. During the Frankfurt auto show Toyota said it received 25,000 orders for the new Prius between June and August. In July, Toyota President Akio Toyoda said the carmaker would shift its focus in the diesel-heavy European market to hybrid vehicles as part of a new effort to use its resources more selectively. The hybrid version of the Auris compact hatchback will be built in the U.K. starting next year. It is unclear whether hybrids will ever be a serious contender in Europe, but their growth could come at the expense of diesels.

Tough times ahead

The European government will make it nearly impossible for diesels to dominate in the next decade.

Automakers will have to make deep cuts in the amount of nitrogen oxides (NOx) that diesels produce by 2014. It is estimated that the new standards will increase the starting prices of diesels by as much as 900 euros, according to study done by an independent panel for the European Commission.

Developments such as Fiat S.p.A.'s MultiAir fuel-saving technology will provide stiff competition. The variable valve timing system boosts horsepower while lowering fuel consumption and CO2 emissions in gasoline engines. The first car to get the variable valve timing system will be the Alfa Romeo MiTo. Sales of MiTo variants with MultiAir start this month in Italy, France and Germany.

Despite all these challenges, powertrain specialists believe that there is no risk of the diesel becoming like the steam engine. Although, it seems very unlike that those clanging, banging powerplants will once again account for every second new car registered in Europe.

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