Volkswagen is the latest car company to announce plans to introduce a vehicle that combines hybrid and diesel technologies. The company says that a diesel-hybrid Golf, to be offered in Europe as early as 2009, will achieve 70 miles to the gallon, and pass tough diesel emissions standards in Europe and California.

The VW diesel hybrid is expected to use a full hybrid drivetrain with a 2.0 liter engine, allowing it to travel in all-electric mode at low speeds.

In the weeks leading up to the Geneva Motor Show, BMW and Mercedes also released plans for diesel-hybrids. BMW will introduce the BMW X5, a seven-passenger vehicle utilizing a 2.0-liter four-cylinder diesel engine and a mild hybrid system. The X5, which is expected to achieve 36 miles per gallon and 200 horsepower, is still in the concept phase. Mercedes-Benz is offering more details about its S400 gasoline-electric luxury sedan, expected in 2009—but has only hinted at a diesel-hybrid version in 2010.

Reports about diesel-hybrid introductions date back several years. Toyota, Ford, Citroen, and Peugot have produced diesel-hybrid concept vehicles or issued press releases about future offerings in the next few years.

Combining diesel and hybrid technologies could offer dramatic fuel economy benefits, but the combined costs of the two systems is a major obstacle. In an interview with HybridCars.com, Dr. Johannes-Joerg Rueger, vice president of engineering for diesel systems for Robert Bosch LLC, a leading manufacturer of diesel vehicle technologies, said, “From a cost perspective, that’s definitely a nightmare. The diesel engine itself is more expensive than a gasoline engine. And a hybrid device on top, definitely that’s the most expensive combination you can have.”

Rueger did not entirely rule out the possibilities for a diesel hybrid. “Nevertheless, for certain applications, we will see it. Bosch is developing diesel-hybrid technology right now, but my perspective is that it will remain a niche market” he said. “I don’t think it will enter the market widely, especially not in the U.S., because the prices for vehicles in general are low compared to Europe—so it would be extremely difficult to introduce a technology which has the highest cost.”