Diesel’s demise dents carmakers

MANUFACTURERS LIKELY TO MISS CO2 GOALS Exposé of levels of nitrogen oxide released by diesel cars prompts sales slump.

The accelerating demise of diesel, long used by carmakers to boost fuel-efficiency, is undermining their plans to meet looming European Union carbon dioxide goals and avoid big annual fines.

Executives at the Geneva car show yesterday were grappling with unpalatable choices: re-engineer existing vehicles at huge expense, restrict sales of some profitable models; or risk hundreds of millions of euros in penalties. Others are clinging to the hope the image of the latest Euro 6 diesels may yet be rehabilitated.

“I am worried,” Volkswagen CEO Matthias Mueller said. “But I’m convinced diesel will experience a revival.”

But a fresh flurry of bad headlines and the prospect of outright diesel vehicle bans are sending their sales into a steeper tailspin. While diesels produce more toxic nitrogen oxides and particulates than gasoline engines, their efficiency has been instrumental in cutting greenhouse gases.

As consumers shun diesels, more carmakers are on track to miss tougher EU carbon dioxide goals taking effect in 2020-21.

Some industry insiders predict carmakers will be forced to rein in sales of larger models by raising prices to avoid overshooting the EU’s 95g/km CO2 target.

Initially sparked by VW’s 2015 emissions test-cheating scandal and subsequent studies exposing the true levels of nitrogen oxide emissions, the diesel slump has since deepened. Sales of diesel cars fell 8% in Europe last year, reducing their market share to 44% from a 55% peak in 2011. That was before the latest PR setbacks, in which VW admitted using monkeys and humans to test exhaust gas, and a court ruled German cities were free to ban older diesel cars, joining Paris, London and a host of other cities that have vowed to run them off the road.

Diesel sales were down another 19% in Germany last month and a whopping 24% in Britain. French carmakers, which have relied heavily on diesels to meet emission goals, are scrambling for alternatives.

PSA Group CEO Carlos Tavares urged governments to suspend penalties for noncompliance until electric car charging networks are better developed.

Last October, investment research house MSCI warned that “all carmakers apart from Toyota are at risk of missing regulatory targets for fleet emissions in 2021”.

Toyota is dropping diesels from its European fleet. Fiat Chrysler is expected to announce a diesel phase-out in its mid-term plan and Ford is reviewing its European line-up. –