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Automobile Magazine - April 29, 2003 editorial team

Ford is considering installing a European-built diesel engine in cars and light trucks in the US, joining rivals like DaimlerChrysler and Volkswagen in widening diesel use in the world's largest vehicle market, Bloomberg News reported.

A 2.7-litre V6 engine Ford is introducing in Europe [soon including Jaguar models] may be installed later in Taurus cars or Explorer sport-utility vehicles in the US, Gerhard Schmidt, Ford's research and advanced engineering vice president, told Bloomberg News. The vehicles would also compete with planned hybrid cars powered by electricity and petrol, the report added.

"It would be a gamble, but so are hybrids, and diesels would be a hell of a lot cheaper to develop, almost free," Art Spinella, president of CNW Marketing Research in Bandon, Oregon, told Bloomberg News.

The news agency said that Ford and PSA Peugeot Citroen have spent a combined $1.08 billion developing four-cylinder diesel engines as their popularity has surged.

About 40% of new cars sold in Europe use diesel fuel compared with 22% in 1997 and that contrasts with 1% in the US last year, a figure DaimlerChrysler estimates may rise to 15% by 2007, the report added.

Passenger vehicles with diesel motors are more profitable than petrol-powered cars as prices are higher and are less likely to be discounted, Bloomberg News noted.

New high-pressure diesel engines use fuel more efficiently and provide better low-speed acceleration than petrol engines, while they're also quieter than previous versions, car company executives told Bloomberg News.

The news agency said tax rules in the European Union make diesel 17% cheaper than petrol at the pump [in some countries], compared with a 3.5% price difference in the US, encouraging wider sales of diesel systems than in North America.

The average price of regular petrol in the US on April 17 was $US1.58 a gallon while diesel cost $1.65, according to the American Automobile Association web site. In Germany, petrol cost an average $4.54 a gallon for unleaded as of March 31 against $3.82 a gallon for diesel, according to Bloomberg analytics.

Bloomberg News noted that Ford and Peugeot agreed in 1998 to share the cost of developing high-pressure diesel motors in Europe, including a range of four-cylinder versions.

The 1.4-litre engine is already in Fords Fiesta and some PSA Peugeot-Citroen models and has also been sold to BMW for the upcoming Mini diesel models which will be launched this summer.

Bloomberg News said the venture plans to use the 2.7-litre, six-cylinder engine in Ford's Mondeo mid-sized car and Jaguar X-type and S-type luxury sedans in Europe as of 2004 but that Peugeot hasn't yet said which models it will equip with the engine.

The new motor "has a high potential to be a good engine for North American applications," Schmidt told Bloomberg News in an interview. "There is a realistic opportunity for diesel sales to expand in the US."

Ford already sells F-250 and F-350 pickup trucks and Excursion vans in the US equipped with 6-litre and 7.3-litre diesel engines built by Navistar International, Bloomberg News noted.

The two companies recently settled a legal dispute after Ford axed a further diesel engine line that Navistar was to build.

Bloomberg News said that DaimlerChrysler will import a diesel version of the Mercedes-Benz E-Class sedan into the US, as well as a 2.8-liter diesel motor for the Jeep Liberty [Cherokee] sport-utility vehicle, beginning next year.

Volkswagen sells diesel-powered versions of its Beetle, Golf and Passat cars in the US and plans to add diesel Passat wagon and Touareg sport-utility vehicle models next year. The carmaker sold 33,000 diesel cars in the US last year, a 10th of its total sales in the country, Bloomberg News noted.

"We could sell more," Stuart Johnson, manager of Volkswagen's US engineering and environmental office, told the news agency. "Diesel sales have been so big in Europe that Volkswagen could only allocate a few cars for the US."

Diesel engines being built for European cars can be adapted for use in US models at little extra cost, car company executives told Bloomberg News.

At the same time, executives and analysts said diesel systems' use in US cars will be limited by the lack of financial incentives and by stricter pollution rules, the report added.

The narrower fuel price difference in the US than in Europe will make diesel engines more attractive primarily for larger vehicles, including pickup trucks and sport-utility vehicles, General Motors' executive director for powertrains, Charles Freese, told Bloomberg News.

"The US market is well suited to accepting diesel in large vehicles, and you would start with areas where there is pent-up demand," Freese reportedly said. "If you assume an extra cost of $2,000, the payback in North America on a passenger car would be over 300,000 miles. On an SUV or a pickup, it would be about 110,000 miles."

Bloomberg News noted that US authorities next year are tightening restrictions on carbon monoxide, nitrogen oxide and particles that car engines put out and will make rules stricter in 2007. The US this month is also raising fuel-use requirements.

"The only real hindrance for diesel in the US is that the complete elimination of nitrogen oxide is quite hard," Michel Schreiber, product and marketing director at Peugeot, told Bloomberg News.

The news agency said diesel engines emit less carbon dioxide than petrol engines and provide 25% to 40% better fuel economy. At the same time, their nitrogen oxide and particle waste may breach US standards, which will remain more restrictive than EU regulations even after the region's rules are tightened in 2005.

"Diesels will have to be much cleaner in 2004 than they have to be this year," Dan Harrison, manager of the vehicles programme group at the US Environmental Protection Agency, told Bloomberg News.

Volkswagen and DaimlerChrysler's diesel cars in the US are likely to meet the weakest nitrogen oxide requirement of 0.6 gram per mile (0.38 gram per kilometre), Harrison reportedly added.

Ford and Volkswagen both expect to meet the US's tighter 2007 requirements, Bloomberg News said.
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