National Post - Financial Post Magazine

Why Volkswagen’s troubles won’t change what people drive.

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James Bond might soon be silently chasing villains in a hybrid. After all, thanks to Volkswagen AG’s emissions scandal, Aston Martin CEO Andy Palmer recently announced diesel is done and electrific­ation is the only way forward for the auto industry. But don’t bet that the fallout from VW’s use of sophistica­ted software to mess with nitrogen-oxide tests will change the types of vehicles driven by Joe and Jane Average.

Electric vehicles once dominated the auto sector (with global stock reaching 30,000 in 1930), but they were driven out of the market by the invention of electric starters, which eliminated the need to hand crank gas-powered vehicles such as the Ford Model T. Following the relatively recent mass-market introducti­on of EVs, they more than tripled to 665,000 last year from 180,000 in 2012.

According to the Electric Vehicles Initiative, the aggregated goal set for 2020 by all countries with known deployment targets is 7.2 million in annual unit sales and 24 million in global stock. With many second-generation EV products headed for showrooms around the world, steady sales growth seems ensured. Neverthele­ss, analyst prediction­s made prior to the VW scandal indicated the world would probably miss its set targets. The big question is whether or not the VW fiasco will do what people such as Tesla CEO Elon Musk hope it will do: drive consumers away from diesel and toward electric.

As things stand, diesels make up about half of all car sales in Europe, but only about 3% of the North American market. Until the VW scandal broke, diesel penetratio­n in the U.S. was expected to significan­tly increase as American consumers realize modern diesels are not the same as the glow-plug beasts of yesteryear. But while diesel use on this side of the pond may not increase as much as expected thanks to VW, there is also little reason to claim diesel is dead.

The basic rule of thumb when it comes to practical engine selection — other than price, which isn’t changing — is that gasoline suits low-mileage drivers, hybrids are good for city driving and diesel best meets the need of high-mileage highway drivers. Keep in mind that diesel provides more torque than gas, which truckers require. It is also still cleaner than gas when it comes to carbon dioxide, the main greenhouse gas emission. Furthermor­e, North American drivers cover a lot of ground and it is a lot easier for them to find a diesel pump than an EV charging station.

In Europe, meanwhile, long-term consumer fallout from the VW scandal may just turn out to be a bump in the road for the world’s largest diesel champion. “On an underlying basis, we expect a surprising­ly limited impact on brand, pricing, volume and profitabil­ity (outside of the U.S. market),” notes a recent report on Volkswagen by analysts at Bernstein, which found most European consumers “either don’t fully understand the issue, or don’t care.”

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