NEWS

The collapse of diesel fuel forces automakers to make drastic decisions

The collapse of diesel fuel forces automakers to make drastic decisions

The accelerating demise of diesel, long used by automakers to increase fuel efficiency, is undermining their plans to meet the European Union's looming carbon dioxide (CO2) targets and avoid large annual fines.

Executives gathered at the Geneva motor show are grappling with unpleasant options: redesigning existing vehicles at a high cost, restricting sales of some profitable models; or risk hundreds of millions of euros in fines.

Reuters Newsagency reports that others are clinging to the hope that the image of the last 6 diesels can still be rehabilitated and their fortunes restored.

"I'm concerned," Volkswagen CEO Matthias Mueller said in a Reuters Television interview.

"But our job is to solve these problems," he said. "I am firmly convinced that diesel will see a resurgence."

Yet a new wave of bad headlines and the growing prospect of outright bans on diesel vehicles are already sending their sales into a steeper nosedive.

While diesel engines produce more toxic nitrogen oxides (NOx) and particulates than gasoline engines, their efficiency has been critical in reducing greenhouse gases.

As consumers avoid diesel engines, more automakers are on track to lose the EU's tougher CO2 targets that will take effect in 2020-21.

Some industry insiders predict that automakers will be forced to control sales of larger models by increasing prices to avoid exceeding the EU's CO2 target of 95 grams per kilometer.

Ford is reviewing its European lineup in light of the diesel crash and is likely to "restrict the sale of some vehicles that push us over the top," said a company source.

Steven Armstrong, the automaker's head of European operations, played down that prospect.

"We don't have to rethink the model lineup," he said.

"Of course we will have to adjust the powertrain volume per vehicle, but it is not going to be a fundamental change for us."

VW brand sales chief Juergen Stackmann told Reuters his business should consider price increases for larger models and / or restrict sales.

“We are required to meet the EU targets, which necessary steps will be clear in 1-1.5 years.

"A significantly smaller mix of diesel engines is not helpful," he said.

Initially sparked by VW's 2015 emissions testing cheat scandal and subsequent studies exposing actual levels of NOx emissions, diesel's slide has deepened rather than stabilized, as Mr Mueller and others expected.

Diesel car sales fell eight percent in Europe last year, reducing its market share to 44 percent from a peak of 55 percent in 2011.

Partly as a result, average CO2 emissions increased in Europe in 2017 for the first time in a decade, according to JATO Dynamics researchers.

That was before the latest public relations setbacks, in which VW admitted to using monkeys and humans to test exhaust fumes, and a court ruled that German cities could ban older diesel cars, joining Paris, London and a series of other urban centers that promised to get them off the road.

Diesel sales fell another 19 percent in Germany last month, and a surprising 24 percent in Britain, amid concerns that declining second-hand values ​​would give way to collapse.

French automakers, who have relied heavily on diesel engines to meet CO2 targets, are now scrambling for alternatives.

Renault has stepped up development of a low-cost hybrid known as the “Locobox,” but the powertrain won't even start running until 2021.

PSA Group CEO Carlos Tavares insisted that last week the Peugeot maker stayed on the right track.

In a newspaper interview on the same day, however, he urged governments to suspend sanctions for non-compliance until electric vehicle charging networks are better developed.

Tavares said he would seek support for his demands from the European auto industry lobby group ACEA, which he currently chairs.

The 48-volt fuel-saving hybrids rushing into Peugeot, Citroen, and the newly acquired Opel lines won't arrive before 2022 under current plans.

"It's not just at PSA that it's happening too late, it's happening too late everywhere," said Philippe Houchois, an automotive analyst at London-based investment bank Jefferies.

"The cost of CO2 compliance is one of the potential triggers for the next auto recession," Houchois said.

"Manufacturers will have to raise prices on the largest gasoline cars to meet their emissions targets, and that is going to affect sales overall."

As early as last October, the investment research house MSCI warned that "all automakers, apart from Toyota, run the risk of not meeting regulatory targets for fleet emissions by 2021."

The Japanese automaker is ditching diesels from its European fleet as it benefits from two decades of dominance in gasoline-electric hybrids.

German premium automakers also have better resources to absorb shock, boosting sales of plug-in hybrids already in their wallets or pipelines, while rushing 48-volt technology to curb emissions in existing model lineups, including the Two-year-old Mercedes. Class e

But the strategy of relying on expensive add-ons to meet CO2 has limits, as well as profitability risks.

BMW admits that it is already having success in the hybrid version of its X5 SUV, priced at € 600 below the diesel version at € 72,500, despite its higher cost.

"The profitability of plug-in hybrids is lower than that of cars with pure combustion engines," said a company spokesman.

"If everyone wants to sell a lot of electrified vehicles, prices are going to crash," said an engineer from PSA Group.

"And since it is a market that is no longer profitable, people are going to lose their shirts."

By David Twomey

Original article (in English)

Video: The Truth About Fuel Savers. Auto Expert John Cadogan (October 2020).