Sales of Volkswagen's 90-hp diesel engine surged during the first half of this year as consumers bought up all the diesel-powered Jettas, New Beetles and Golfs in the face of soaring gasoline prices.
Volkswagen of America Inc. sold 11,471 during the first six months of this year. Sales of the TDI engine peaked in May, the same month the average price for a gallon of regular gasoline soared to $1.71.
Dealers say they could have sold twice as many diesel vehicles had they been available. TDI sales dropped in June, but that was primarily because consumers wiped out dealer inventory.
Volkswagen's success runs counter to the long-held belief that U.S. consumers see diesels as noisy, smelly, dirty engines - an image branded on the U.S. psyche when automakers turned to diesel engines during the energy crisis in the 1970s.
Even though they are sold out, diesels are a small part of VW's overall sales volume in the United States and as such are not the strongest indication of broad desire for diesels.
But diesels will make a big comeback in the United States in the second half of this decade, predicts J.D. Power and Associates in Agoura Hills, Calif. Volkswagen's diesel experience is a harbinger of what is to come, said Thad Malesh, director of alternative power technologies at J.D. Power.
New diesels quiet, clean
In North America, diesel engines are used primarily by the commercial trucking industry and in full-sized, heavy-duty pickups typically used for towing and construction work.
But advances in diesel technologies, such as the common-rail injection systems that make a diesel engine run quieter, reduce emissions and improve fuel economy, will help U.S. consumers to accept diesels in light trucks and cars, Malesh said.
'We believe through market assessment that diesel, the European version - which is direct injection common rail - will be coming back to the U.S. market in substantial numbers in the second half of this decade,' Malesh said. 'Virtually every major vehicle manufacturer is looking at bringing diesel back to the U.S., or bringing it for the first time. It is a huge trend.'
Since 1999, J.D. Power has noted an increasing interest by U.S. consumers in fuel-efficient vehicles. This year the interest level surged.
'About 55 percent of all new-vehicle owners are now interested in relatively better fuel mileage,' Malesh said. 'At a 15 percentage point jump, that's huge. That's absolutely a leading indicator to where consumer interest lies.'
Dealers want more diesels
In the meantime, Volkswagen dealers don't want to wait. They want more diesels with greater horsepower.
'We've asked Germany for more diesel production,' said Al Gossett, owner of Gossett Motor Cars in Memphis, Tenn., and chairman of the Volkswagen Dealer Advisory Council. 'It's the gas prices. People want that great fuel economy that the diesel delivers.'
Volkswagen dealers are taking orders and putting customers on waiting lists for the 2002 diesel models. The 2001 Volkswagens equipped with the turbocharged, 1.9-liter, four-cylinder engine and a manual transmission have a fuel economy rating of 42 mpg in the city and 49 mpg on the highway.
Diesels made up nearly 7 percent of Volkswagen sales in the first half, but dealers think that given an ample supply it could have been as high as 18 percent.
Forecasting how many diesels Volks-wagen needs for the U.S. market has been tough with the fluctuating gasoline prices, said Stefan Krebsfanger, manager of product strategy for VWoA in Auburn Hills, Mich.
'We'd love to see steady penetration rates of 15 percent so we can then gear up our diesel production all over the world,' he said. 'But as long as you see peaks and valleys, it is kind of tough to make the investment.'
Volkswagen dealers in the United States want a diesel with greater horsepower, Gossett said. With only 90 hp, the 1.9-liter engine is not powerful enough for the larger Passat sedan.
But Volkswagen most likely will stick with its 90-hp diesel in the United States for the 2002 and 2003 model years, Krebsfanger said. A new TDI probably will not arrive here until the 2004 model year, when new emissions-reducing technology has been developed, he said.
Volkswagen offers a 1.9-liter TDI with up to 150 hp in Europe, but the engine would not meet existing U.S. emissions standards, he added.
To meet 2004 U.S. emissions standards for diesels, Volkswagen is developing new diesel-engine technology, including the use of four valves per cylinder, instead of the two valves per cylinder on the current 1.9-liter TDI.
Also, the diesel fuel injector is being refined to allow for higher injection pressures. The higher pressure creates a fine mist that distributes the fuel more evenly in the combustion chamber, Krebsfanger said.
Volkswagen's success with its 1.9-liter diesel can be explained partly by the young buyers of the New Beetle, Golf and Jetta, Malesh said.
'A lot of those folks have never seen a diesel in a passenger vehicle,' Malesh said. 'When they see how great it is and it doesn't have all the obvious bad stuff that more of the old diesels had, they're open to it.'
Siemens Automotive Corp., a supplier of diesel common-rail injection systems, puts the U.S. diesel market at 580,000 units - mostly large sport-utilities and heavy-duty pickups.
Siemens has a cautious forecast, saying that U.S. interest in diesel will be limited to the truck market but that automakers plan to expand diesel availability on pickups and sport-utilities.
A recent public opinion survey of 1,000 consumers, commissioned by the Washington-based Diesel Technology Forum, found that more than half have a positive view of diesel power, including diesel in the automotive industry.
More than half felt the diesel industry has moved in an environmentally positive direction during the past five years, said Allen Schaeffer, executive director of the group, which represents diesel engine makers, General Motors, parts suppliers and fuel producers. 'I would say we are encouraged by this,' Schaeffer said.
But consumers need more education about advances in diesel engines, he said. This country also must develop an integrated approach to addressing energy and environmental concerns together, he said.