DETROIT – Although Ford of Europe’s luxury brands have yet to embrace gasoline hybrid-electric vehicles on a par with their North American parent, they are slowly beginning to examine the feasibility of the technology.

In mid-2006, Volvo Car made headlines announcing it would invest SK10 billion ($1.39 billion) in environmental engineering research – with a concentration on HEVs.

Concurrently, Ford Motor Co. revealed plans to establish an HEV development center in Gothenburg, Sweden, that would develop technologies for its Premier Automotive Group and the Ford brand in Europe.

The disclosures came as a bit of a surprise, because hybrids remain barely a blip on Europe’s radar screen. With gasoline prices much higher there than in the U.S., diesel engines caught on in Europe in big numbers well before HEVs did in the U.S., and they’re now thoroughly entrenched in the European automotive landscape, accounting for roughly half of new-car sales.

In making their investment announcements, Ford and Volvo were quick to point out that while Volvo’s HEV research would complement work performed at the new Ford center, the Volvo outlay was earmarked for ongoing research into a variety of environmentally technologies, not just HEVs.

Alternative fuels such as E85, an ethanol/gasoline blend, also are finding a niche in Europe, proving popular in countries such as Sweden.

Today, the center is up and running with a staff that ranges from 30 to 100 people at any given time, Volvo Chief Operating Officer Steven Armstrong tells Ward’s in a recent interview here.

“We have a number of different people there who work closely with our colleagues over here in the U.S., because obviously they have the base with the Escape Hybrid,” he says. “But we are the center of development in Europe. It’s a pretty focused area for us.”

Despite the optimistic assessment of Volvo’s ongoing HEV research, Armstrong is tight-lipped about whether Volvo has an HEV in the works.

“To be honest with you, a well-executed diesel is probably the best environmental option out there,” he says. “It’s a great balance of affordability and performance.

“Of course a number of European manufacturers are looking at and talking about hybrids, but it’s the U.S. that’s the key driver for the market,” he adds.

Road blocking widespread HEV penetration in Europe is a hesitancy by auto makers to center all their alternative-powertrain investment on one technology.

“One of the things we’ve been saying to individual governments is what we all have to look for in the future is the best way to reduce (carbon dioxide),” Lewis Booth, executive vice president-Ford of Europe and PAG, tells Ward’s.

“We don’t encourage a particular solution, because some solutions will be more acceptable to customers in some regions,” he says.

Although Booth doesn’t rule out HEVs for Ford or the PAG brands of Volvo, Jaguar and Land Rover in Europe, he says advanced diesels are a more cost-effective solution for reducing CO2.

However, Booth says HEVs could play a role at PAG in North America. The business case, he says, is being considered.

PAG also is studying the feasibility of bringing diesels to the U.S.

“We haven’t come to a conclusion yet,” Booth says. “Because it’s both an investment in technology, and it’s also trying to understand whether our customers are going to find a diesel attractive in North America. Historically, they’ve been quite resistant to diesels.”