Petrol is expensive in Europe and has been for a long time which goes a long way to explaining the popularity of fuel-efficient diesel passenger vehicles on the other side of the pond. Diesels account for over half of all vehicle sales in Europe compared to less than five percent in the U.S., or Australia for that matter. Diesel technology has progressed greatly though since the 1970's when many U.S. states banned them from the roads. And they're about to return.
These days modern, clean diesel engines include precise fuel injection, advanced engine management and particulate filters to reduce emissions. But even so, a big stumbling block to their re-introduction to the U.S. market has been the poor quality of the diesel fuel sold state-side. With the recent introduction of ultra low sulphur diesel though, those days are at an end and a wave of new clean diesel models will be coming to market during the 2007, 2008 and 2009 release seasons.
Hybrids have so far led the market in fuel-efficient new models but the premium for hybrid technology currently stands at around $4,000 over a conventional vehicle compared with just $2,000 for a diesel variant. And the 20 - 40 percent better fuel economy that diesels' enjoy over regular petrol vehicles could have a huge impact if they're embraced en-masse. The EPA has estimated a saving of 1.4 million barrels of oil per day in the U.S. if a third of the passenger vehicles on the road were oil burners - virtually the same amount being imported daily from Saudi Arabia.
Analysis: Expect consumer mind-share to shift slowly to encompass diesels as competition for hybrids, but by 2010 I think we'll see more diesel options available to consumers than hybrid options.