From DetNews AutoInsider:
<font size="2" face="Verdana, Arial">That would kick ass!PARIS -- Ford Motor Co., the world's second-biggest carmaker, is considering installing a European- built diesel engine in cars and light trucks in the U.S., joining rivals including DaimlerChrysler AG and Volkswagen AG in widening the system's use in the world's largest vehicle market.
A 2.7-liter V-6 engine Ford is introducing in Europe may be installed later in Taurus cars or Explorer sport-utility vehicles in the U.S., said Gerhard Schmidt, Ford's research and advanced engineering vice president. The vehicles would also compete with planned hybrid cars powered by electricity and gasoline.
"It would be a gamble, but so are hybrids, and diesels would be a hell of a lot cheaper to develop, almost free," said Art Spinella, president of CNW Marketing Research Inc. in Bandon, Oregon.
Ford and PSA Peugeot Citroen have spent a combined $1.08 billion developing four-cylinder diesel engines as the powering system's popularity has surged. About 40 percent of new cars sold in Europe use diesel fuel compared with 22 percent in 1997. That contrasts with 1 percent in the U.S. last year, a figure DaimlerChrysler AG estimates may rise to 15 percent by 2007.
Passenger vehicles with diesel motors are more profitable than gasoline-fueled cars as prices are higher and are less likely to be discounted. A Peugeot 206 Grand Filou 60 model costs 11,500 euros ($12,500), while a diesel 206 Grand Filou Hdi Eco 70 costs 13,200 euros, according to the 2003 yearbook of the German automobile association, or ADAC.
New high-pressure diesel engines use fuel more efficiently and provide better low-speed acceleration than gasoline engines, while they're also quieter than previous versions, executives said.
Tax rules in the European Union make diesel 17 percent cheaper than gasoline at the pump, compared with a 3.5 percent price difference in the U.S., encouraging wider sales of diesel systems than in North America.
The average price of regular gasoline in the U.S. on April 17 was $1.58 a gallon while diesel cost $1.65, according to the American Automobile Association Web site. In Germany, gasoline cost an average $4.54 a gallon for unleaded gasoline as of March 31 against $3.82 a gallon for diesel, according to Bloomberg analytics.
Ford and Peugeot, Europe's second-biggest carmaker, agreed in 1998 to share the cost of developing high-pressure diesel motors in Europe, including a range of four-cylinder versions.
The venture plans to use the 2.7-liter, six-cylinder engine in Ford's Mondeo mid-sized car and Jaguar X-type and S-type luxury sedans in Europe as of 2004. Peugeot hasn't yet said which models it will equip with the engine.
The new motor "has a high potential to be a good engine for North American applications," said Schmidt in an interview. "There is a realistic opportunity for diesel sales to expand in the U.S."
Ford already sells F-250 and F-350 pickup trucks and Excursion vans in the U.S. equipped with 6-liter and 7.3-liter diesel engines built by Navistar International Inc.
DaimlerChrysler will import a diesel version of the Mercedes- Benz E-Class sedan into the U.S., as well as a 2.8-liter diesel motor for the Jeep Liberty sport-utility vehicle, beginning next year.
Volkswagen, Europe's biggest carmaker, sells diesel-powered versions of its Beetle, Golf and Passat cars in the U.S. and plans to add diesel-fueled Passat wagon and Touareg sport-utility vehicle models next year. The carmaker sold 33,000 diesel cars in the U.S. last year, a 10th of Volkswagen's total sales in the country.
"We could sell more," said Stuart Johnson, manager of Volkswagen's U.S. engineering and environmental office. "Diesel sales have been so big in Europe that Volkswagen could only allocate a few cars for the U.S."
Motors being built for European cars can be adapted for use in U.S. models at little extra cost, executives said.
At the same time, diesel systems' use in U.S. cars will be limited by the lack of financial incentives and by stricter pollution rules, executives and analysts said.
The narrower fuel-price difference in the U.S. than in Europe will make diesel engines more attractive primarily for larger vehicles, including pickup trucks and sport-utility vehicles, said Charles Freese, General Motors' executive director for powertrains.
"The U.S. market is well suited to accepting diesel in large vehicles, and you would start with areas where there is pent-up demand," Freese said. "If you assume an extra cost of $2,000, the payback in North America on a passenger car would be over 300,000 miles. On an SUV or a pickup, it would be about 110,000 miles."
U.S. authorities next year are tightening restrictions on carbon monoxide, nitrogen oxide and particles that car engines put out and will make rules stricter in 2007. The U.S. this month is also raising fuel-use requirements.
"The only real hindrance for diesel in the U.S. is that the complete elimination of nitrogen oxide is quite hard," said Michel Schreiber, product and marketing director at Peugeot.
Diesel engines emit less carbon dioxide than gasoline engines and provide 25 percent to 40 percent better mileage. At the same time, their nitrogen oxide and particle waste may breach U.S. standards, which will remain more restrictive than EU regulations even after the region's rules are tightened in 2005.
"Diesels will have to be much cleaner in 2004 than they have to be this year," said Dan Harrison, manager of the vehicles program group at the U.S. Environmental Protection Agency, which tests emissions.
Volkswagen and DaimlerChrysler's diesel cars in the U.S. are likely to meet the weakest nitrogen oxide requirement of 0.6 gram per mile (0.38 gram per kilometer), Harrison said.
Ford and Volkswagen both expect to meet the U.S.'s tighter 2007 requirements.