The Future of Turbodiesels (and Gas Turbos)

Everyday on my way to work, John McElroy’s Automotive Insight story runs at 6:53 a.m. on WWJ newsradio 950AM here in Detroit. John has covered the auto industry forever, and knows automotive like no one else in the world. Today's story, which can be heard here, points out that diesel penetration in Europe has fallen back below 50 percent for the first time in a while, and after talking to automakers, John concludes that diesels have probably topped out, and will likely continue to slowly decline.

He notes that this is happening just as all of the German OEMs introduce 50-state diesels here in the U.S. (for the last several years, most diesels were only compliant with emissions regs in 45 states, the oddballs being California and four Northeastern states that follow California Air Resources Board tailpipe standards).

McElroy’s conclusion is that the prospects for widespread diesel adoption in mainstream passenger cars in the U.S. are less than what they were even one year ago, and that diesels will likely remain in the realm of luxury cars in the U.S. where buyers won’t mind higher fuel costs.

My take: this presumes that diesel will continue to cost more than gasoline. Until September 2004, this wasn’t the case. I’ve no indication that this will reverse course anytime soon, but it’s still necessary for this argument to hold water. Although I just paid $3.17/gallon to fill up my car this morning, but there are so many scenarios whereby crude prices could shoot back up in the next 24 months, I don’t know that I’d make a long-term bet on cheaper oil . . .

If you haven’t driven a modern diesel, like VW and Audi’s TDI vehicles, or the monster BMW 330d with a proper Getrag six-speed manual, I can tell you that they are astounding to drive. Driven back to back with gas engines of the same displacement in the same cars is a night and day experience.

Still, John may be on to something here, at least in Europe. Or not. One of my clients, Honeywell Turbo Technologies, has been suggesting that diesels will continue to grow, albeit slowly, through 2012. But in an interesting twist. They contend that while turbodiesels will grow, the real action is in gasoline turbo-equipped vehicles (e.g. EcoBoost and GM’s 1.4 turbo in the Chevy Cruze). Between 2007 and 2012, Honeywell says that gas turbos will triple their share of the global passenger vehicle market.

Still, if regulations in Europe and the U.S. continue their slide toward zero tailpipe emissions, especially of NOx and PM (soot), the cost of meeting these regs--and the subsequent decrease in diesel's efficiency advantage (plugging up those exhaust streams hurts efficiency), John may be right after all.