Lutz Pans Diesels on Day Chevy Reveals Cruze 46-MPG Rating

DETROIT – Bob Lutz, retired vice chairman at General Motors and now a leading industry pundit, takes a dim view of diesel engines for cars in the U.S. on the day his former employer says its first new oil-burner for the segment will offer class-leading fuel economy.

“From a cost-of-ownership standpoint in the United States, with present technology and present emissions, diesels do not make economic sense,” Lutz says, citing the premium diesel owners pay for fuel and the extra emissions-cleansing technology costs OEMs add to their sticker prices over cars with gasoline engines.

Lutz’s remarks come on the day GM announces the ’14 Chevrolet Cruze Clean Turbo Diesel will achieve a class-leading 46 mpg (5.1 L/100 km) in the highway cycle, or 4 mpg (1.7 km/L) better than its primary rival the ’13 Volkswagen Jetta TDI.

The Cruze diesel, due at U.S. dealerships this fall, marks GM’s first car diesel in some 20 years.

The auto maker says it expects consumers will gravitate toward diesel technology for more than fuel economy. Executives believe the torque-laden performance of the Cruze diesel will be attractive to enthusiasts, and the engine gives the auto maker a hedge against historically volatile fuel prices.

But Lutz, who remade GM’s product portfolio between 2001 and 2010 and was advising the auto maker as recently as 2011, isn’t buying.

He admits the technology works in Europe, where emissions regulations are much looser and the fuel generally costs less than gasoline. In the U.S., however, new corporate average fuel economy and emissions regulations compel auto makers to spend thousands of dollars on exhaust aftertreatment technology to clean up diesel tailpipes.

The fuel currently costs 12% more than gasoline, according to nationwide averages from the American Automobile Assn.

GM recently announced the Cruze turbodiesel with a 6-speed automatic transmission would cost $25,695, or 15.1% more than a comparably equipped model with a 1.4L turbo gasoline engine achieving 38 mpg (6.2 L/100 km) highway. The diesel costs 23.1% more than an Eco version of the Cruze with fuel-saving technology rated at 42 mpg (5.6 L/100 km).

“People are buying diesel and paying a premium price because they want interesting technology,” Lutz says here at the 2013 SAE World Congress. “It is (seen) as the intelligent way to save fuel, but it is mostly psychological.”

Lutz estimates a diesel buyer pays a total premium, including annual fuel costs, of about $5,000 to achieve a 20% bump in fuel economy.

“I don’t get it,” he adds. “And the American public has figured it out.”

Nonetheless, the U.S. market will add a number of diesel-powered passenger vehicles this year. On top of the Cruze and Jetta, shoppers soon will find the technology optional on the Chrysler’s Jeep Cherokee and the Mazda6 for the first time, bringing the total light-vehicle offerings to 42 models, according to diesel expert and supplier Bosch.

High-end German manufacturers have offered diesel engines for a number of years, and BMW will bring an all-new oil-burner to its popular 3-Series later in 2013.

Bosch expects the penetration of diesel engines in the U.S. LV market to rise to 54 models by 2017 and command 10% of the market.

Lutz also takes aim at battery-electric vehicles, saying they “have their place” in the market, but until the cost of battery technology declines, charging times decrease and driving ranges increase, the cars will be relegated to a bit role in the market.

“That will be fixed by future generations of battery technology,” he offers.

The longtime industry executive also says he continues to favor implementation of a gasoline tax in the U.S. to improve fuel economy by driving consumers to more-efficient vehicles, but sees no political will in Washington for such a proposition.

Interestingly, Lutz does favor investment in light rail for broader public transportation options in the country. He says no developed nation has seen a decline in new-vehicle sales when a robust public transit system operates, and it would reduce traffic congestion in urban areas to make driving more pleasurable than ever.

“Anyone who has fought rush hour traffic in a major American city…it’s easy to convince yourself mass transit makes a lot of sense,” he says. “The automobile cannot be truly enjoyed without a balance of mass transit to keep unnecessary traffic off the road.”

Lutz keeps his remarks on lofty U.S. fuel-economy goals relatively brief, saying the rules are not going away. The standards will lead not to a different fleet, but only to more light-hybrid technology for larger and higher-performance vehicles.

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