Tougher European Emissions Laws and Increasing Scrutiny Have Automakers Backing Away from Diesel Cars

Tougher emissions laws coming in 2020 are predicted to spike prices for diesel cars and bring down their popularity in Europe.

This is the word of a few auto executives, as relayed by Automotive News which tapped into their viewpoints last week at the Paris Motor Show. While some of the larger vehicle segments are likely to see diesel remain strong, smaller diesel cars are likely to wane in the near future, they said.

Increasing government scrutiny and rising costs to comply with emissions regulations will increase costs significantly in the near future. With tougher regulations starting in 2020, VW brand chairman Herbert Diess thinks that the additional technology needed for compliance will raise the cost of diesels by 2,000 euros per car (about $2,200).

“That might change the product mix a little bit,” Diess said at the Paris show last week. “In smaller cars, will the customer still be prepared to pay a price of an additional 2,000 euros? Probably not.”

Europe has been the world’s largest market for diesel passenger car sales for several years. Owners value their high torque and efficiency, which may continue for large cars and SUV segments. For smaller passenger cars, diesel is competing with fuel efficient gasoline cars and plug-in electrified vehicles.

The rising cost of diesel vehicles will cause a “rebalancing” of new vehicle choices, said Nissan’s chief planning officer Philippe Klein. Consumers have more options in looking at alternatives to diesel such as gasoline or electrified powertrains, he said.

“Based on the visibility we have, I still think diesel is a good solution for fuel economy and CO2 for big, heavy vehicles and vehicles that are driven long distances,” Klein said. “The question is a bit more open for smaller cars.”

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Increasing government scrutiny is putting more pressure on automakers to comply in the wake of Volkswagen’s diesel emissions scandal. European Union regulators are investigating emissions testing procedures, and are likely to put more pressure on automakers to invest in cleaner technologies.

“If the result of the scrutiny is that diesel is found to not be as clean as we thought it was, governments will change the way that they regulate, and that will make the difference,” said Stephanie Brinley, an analyst with IHS Automotive.

Market demand in Europe will shape the future of diesel cars long-term, said Ian Robertson, board member for sales and marketing at BMW AG. Some markets in Europe are up to 90 percent diesel in new vehicle sales, he said.

“We are very flexible,” Robertson said. “We have an engine range which goes down the same lines to make petrol and diesel engines, so if the market changes, that’s OK.”

Automotive News