VW Scandal Won’t Kill Diesels

There is a famous old Monty Python skit where a disgruntled customer walks into a pet shop with a bird cage and wants to return an obviously dead parrot. The proprietor insists the parrot is “just resting” and the ensuing argument takes silliness to a comedic level that may never be equaled.

Thanks to the horrible news revolving around Volkswagen’s emissions cheating scandal, it’s easy to picture diesel proponents as the man behind the pet shop counter insisting diesel powerplants still have a future.

On the surface, the outlook for diesels appears grim. Diesel market share in U.S. light vehicles has fallen from 3.08% in 2014 to 2.29% through August 2016.

Until the scandal broke Sept. 18, 2015, VW traditionally sold more passenger-car diesels in the U.S. than any other automaker. In 2016, it is paying out tens of billions of dollars in fines and penalties for equipping millions of vehicles worldwide with emissions-cheating software.

VW also looks like it is walking away from compression-ignition engines by promising to spend billions developing an impressive lineup of electric vehicles and fund the expansion of EV charging networks.

What’s more, the VW scandal gives federal regulators and the powerful California Air Resources Board another reason to dislike the engines. They have never been fond of them to begin with, and now they have even less incentive to encourage consumers to buy them. 

Just how much VW’s flagrant violation of emissions rules are to blame for the falling popularity of diesels currently is being studied by a variety of experts, but buyer outrage likely is far less the culprit than it seems at the moment.

The car-buying public has a very short memory when it comes to most issues. General Motors allegedly poisoned the U.S. diesel market in the early 1980s with a poorly executed diesel engine, but this appears to be a factoid only remembered by aging automotive journalists.

What is significant is that VW and its various brands are not allowed to sell diesels at all, and low gas prices are crimping interest in almost all high-efficiency powertrains. The only alternative powertrain to see an uptick in market share from 2014 to mid-2016, according to WardsAuto data, is plug-in hybrids. This surge is suspected to be driven by the fact they still qualify for generous incentives and access to California’s high-occupancy traffic lanes while conventional hybrids do not.

VW sold 37,397 diesel-powered Jettas in 2014 and 16,177 in 2015. Overall, the automaker sold 79,443 diesel-powered vehicles in the U.S. in 2014 and 54,197 in 2015.

Meanwhile, thanks to attractive new applications, some automakers actually saw diesel sales rise while VW was roiling the waters. For instance, Fiat Chrysler saw light-vehicle diesel sales rise from 65,602 during the first half of 2015 to 76,084 during the second half of the year when Dieselgate outrage was running high, thanks to the popularity of the 3.0L V-6 Turbodiesel in the Ram pickup. A spokesman says the take-rate continues to run from 10% to 15%.

GM also saw diesel vehicle sales rise during the crucial period following the VW revelations, and it recently announced it is doubling down on its commitment by offering diesel options in its new Chevy Cruze hatchback and Equinox CUV.

“Based on what we hear from manufacturers, what we have seen in our own opinion surveys and additional analysis, we are confident about the future role of clean diesel in the U.S. market despite the VW diesel emissions situation that has played out over the last year,” says Allen Schaeffer, executive director of the Diesel Technology Forum.

Clearly diesels are not for everyone, but when it comes to hauling loads, long-range fuel economy or pure stump-pulling torque, nothing can match them.

Even though cheap gas and bad publicity might be suppressing demand, it’s very possible diesel sales will perk up in the coming year. You can say diesel sales are taking a little rest and you can say it with a straight face.

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