After Killing VM Motori Program, GM Takes Cadillac Diesel In-House

GENEVA – Since pulling the plug on a diesel engine under development for Cadillac by VM Motori in 2009, General Motors has launched a new program for a similar engine for the brand in Europe but reiterates it will not arrive anytime soon.

Dave Leone, chief engineer-GM performance cars, says the diesel-backed powertrain so critical to Cadillac’s success in Europe will not come “as soon as I would like,” but will go into the CTS and ATS sports sedans.

“We are working on diesels for both of those applications,” he tells WardsAuto on the sidelines of the Geneva auto show today.

However, unlike 2007 when GM held a 50% stake in Italian diesel-engine maker VM Motori, the Detroit automaker is running the program on its own. The in-house development of the mill signals the new financial health of GM, which is sinking millions of dollars into its powertrain lineup over the next several years.

The investment includes another in-house diesel, a 6.6L turbocharged V-8 engine for the automaker’s big trucks expected to cost $60 million.

But the dead Cadillac diesel program also underscores the effect GM’s 2009 U.S. bankruptcy placed on its business around the globe. In Europe, diesels account for more than 50% of powertrain mix and without one Cadillac cannot seriously challenge leading regional luxury-vehicle makers Daimler, BMW and Audi.

Cadillac sold 1,725 vehicles in Europe last year, according to WardsAuto data. BMW delivered 857,883 units and Audi accounted for 745,487. Daimler sold 1.01 million.

“When we went through bankruptcy we had to shut the (diesel) project down,” Leone says.

Then last year, Fiat took over full ownership of the Cento-based Fiat-GM Powertrain joint venture in deal valued at the time at a reported €34.1 million ($47.1 million). GM exercised a put option in the JV to clear Fiat’s purchase.

VM, now 100% owned by Fiat, ushered the former Cadillac diesel to completion in the form of the 3.0L turbodiesel V-6 in the Ram 1500. Dealer orders for the Ram EcoDiesel, a 2014 Ward’s 10 Best Engine winner, began last month and demand threatens to outstrip supply.

“That engine was in Cadillac CTS and SRX prototypes I drove here in Europe,” Leone says. “(Fiat) picked it up for pennies on the dollar.”

Leone admits a clean-sheet diesel program cannot be dialed up overnight. “It takes years to develop one and get it right and we’re going to get it right.”

While critical to Cadillac’s long-term plans in Europe, GM officials here say the brand’s rollout will be a deliberate one with sales taking a backseat for now to growing consumer awareness.

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