The Diesels Are Coming. But Will Anyone Want Them?

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Automakers are expanding their offerings to snare customers well beyond today's diesel enthusiasts. They are hoping to attract consumers who are simply looking for better fuel economy, and who are gravitating to hybrid vehicles or small cars. "There is no question that there is a need for engaging marketing to better sell diesel to the American buying public," says independent marketing consultant Dennis Keene.

Not Many Ads to Support Diesel

Diesels typically cost $2,000 to $2,500 more than gas equivalents. But hybrids can cost as much as $8,000 more. The EPA rates the VW gas-powered Jetta at 21 mpg city/29 highway, and the new Jetta TDI at 29/40. But VW's own tests show that real-world fuel economy of the new TDI is more like 38/44. Back-of-the-envelope arithmetic, depending on how long a driver figures to own the vehicle, can pay off much better than a hybrid.

So, far, companies like VW and Mercedes have done very little advertising around diesel, mostly low-key magazine advertising. Honda made an enormous splash in Britain in 2004-2005 when it began a campaign around its then-brand-new diesel engines. Diesel is a already a mainstay in Europe, where more than 40% of new cars sold are diesel-powered. The addition of the diesel engine and the campaign turned around what had been a flagging business for Honda in Britain.

That campaign featured an animated ad that told a story of how Honda engineers disliked diesel engines for years, but then hit on a technology that was clean and environmentally beneficial. The campaign featured a song crooned by National Public Radio icon Garrison Keillor, the longtime host of radio show Prairie Home Companion.

Availability Problems Turn Off Drivers

Honda officials, though, say they do not anticipate importing that campaign from the Britain to the U.S. to usher in its diesel engines here. It might be tough to get Keillor to go along anyway. Toyota Prius has been a major sponsor of his radio program for years.

The growth in the U.S. is expected to move up, too. Johannes-Joerg Rueger, vice-president of engineering for diesel systems at Robert Bosch, projects that 15% of new vehicles sales will be diesel-powered by 2015. That would put annual sales at more than 2 million if the company is right. (Click here to read an interview with Rueger.)

One of the big obstacles to acceptance of diesel by automakers and some analysts is the fact that diesel fuel is not available at every gas station, and many of those where it is pumped are set up for trucks. A lot of people simply don't want to line up behind a tractor-trailer truck to fill up. "The fact is that when you own a diesel vehicle, it goes a lot further on a tank than most, and owners who buy the vehicles simply adapt their behavior and know where all the stations are in their area," says marketing consultant Keene. "If gas stays above $4.00 and diesel stays within 10% of gas prices, there will, I think, be a steady increase in both acceptance of diesel and sales," he added.

Click here to see a lineup of diesels that will (still) save you money.

Kiley is a senior correspondent in BusinessWeek's Detroit bureau.