Audi scraps 2.0-liter diesel for retooled A4 in U.S.

SAN DIEGO -- Audi of America has scrapped plans to launch the redesigned 2017 A4 sedan with an optional 2.0-liter diesel engine, its top U.S. executive says.

The decision, made in the last six months, reflects lower demand for diesel-engine variants of Audi sedans relative to crossovers, Audi of America President Scott Keogh told Automotive News on the sidelines of a media event for the A4 here.

The redesigned A4 arrives in showrooms next month. Keogh said pulling the plug on the A4 diesel was not the result of parent-company Volkswagen’s ongoing negotiations with U.S. regulators about its 2.0-liter diesel engines, which were developed by VW.

“The marketplace speaks, we listen to the marketplace, and the marketplace told us, 'Go with SUVs,’” Keogh said.

In the first six months of last year, diesel models accounted for roughly 6 to 8 percent of Audi’s A6, A7 and A8 sedans, Audi says. Diesels accounted for about 12 percent of Q5 compact crossover sales and nearly 22 percent of Q7 midsize crossover sales in the same period, the company says.

Sales of new diesel vehicles from Volkswagen and Audi remain idled as the Volkswagen Group awaits certification from the EPA that the engines conform to U.S. emissions regulations.

The group withdrew its applications for EPA approval for 2016 model diesels last fall and is still working with the agency for approvals needed to resume new diesel sales.

“We will get the cars certified and we would have brought [the A4 diesel] if there was enough demand,” Keogh said. “Every decision is a blend of a lot of things but I think the predominant thing is there was not significant market demand for the TDI sedans we had in the marketplace, A3, A6, A7 A8.”

Keogh declined to comment on Audi’s talks with the EPA. VW has taken the lead on discussions related to the 2.0-liter engines while Audi has handled EPA issues related to the 3.0-liter V-6 diesels used in its larger sedans and crossovers.

The rest of Audi’s diesel lineup will remain at least through each model’s current life cycle, Keogh said.

He added, “They’re in the market ... so the expense is already there, so I think we’ll hold the debate when the next generation car comes.”