Fueled by Economy, Automakers Ready 'Clean Diesel' Push in U.S.

New Models Better Equipped to Overcome Negative Perceptions

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DETROIT (AdAge.com) -- Soon you might see Patrick Dempsey and Sandra Bullock tooling around in diesels -- but not those loud, stinky vehicles from years ago. Coming is a new breed of clean and quiet engines that can meet even strict emissions standards in California and New York. "This is not your grandfather's technology," said Steve Cannon, VP-marketing at Mercedes-Benz USA.
Why buy Benz? Because 'Blue is the new grean.'
Why buy Benz? Because 'Blue is the new grean.'

In Europe, diesel vehicles hold some 50% of the market, but Mike Omotoso, senior manager at J.D. Power & Associates, said diesel models account for only 2% of new light-vehicle sales a year in the U.S. That, however, is about to change, he said, estimating that the figure will rise to 10% by 2015.

German automakers are leading the charge. Volkswagen of America launched its Jetta TDI earlier this year, and sibling Audi soon will offer a diesel Q7 SUV. Mercedes-Benz USA will launch its newest BlueTec diesel vehicle, an E-Class sedan, next month, and BMW's first clean-diesel product launch in the U.S., the X5 SUV, is coming later this year, followed by a version of its best-selling model, the 3 Series sedan, in January.

But those carmakers will have to change this country's diesel-dissing ways. Americans see diesel vehicles as "poor-performing, meaning slow; black, sooty emissions; smelly; and loud," said Jack Pitney, VP-marketing for BMW of North America. "We have huge perceptual barriers with diesel launches. There's a tremendous opportunity for us but also a real education challenge."

Fuel economy
J.D. Power's Mr. Omotoso said marketers face other roadblocks as well. Diesel fuel costs more than gasoline, and fewer than half the country's 170,000 gas stations sell diesel. But "you can drive longer distances between fill-ups," he said, "so it's not likely you'll run out of gas." He said diesel provides 30% better fuel economy.

Gasoline averaged $3.64 a gallon on Sept. 8, and diesel was $4.05 in the U.S., according to the Energy Information Administration.

The only diesels Detroit automakers offer are heavy-duty pickups, but they plan to expand to light full-size pickups in the next couple of years, Mr. Omotoso said.

In 2010, Ford Motor Co. will start offering a clean-diesel version of its light-duty F-150 pickup but not of small cars, a spokesman said. "We are focusing on EcoBoost in the U.S.," he said, referring to Ford's new direct-injection turbo engines, which offer better performance and fuel economy.

Ford would have to charge too much for small diesel cars here because the engines are made in Europe, and the exchange rate boosts the cost here, Mr. Omotoso said.

Cleaning up image
BMW started beating the drums for its Advanced Diesel with BluePerformance engine a year ago with out-of-home and print ads in influencer magazines such as Smithsonian. GSD&M Idea City, Austin, Texas, handles that push. BMW is also readying a diesel microsite, created by Dotglu, New York, to help dispel misperceptions.

Mr. Pitney said BMW's education push is working, citing the fact that diesel has been among the top 10 search terms on bmwusa.com in the year since the ads started.

Mercedes-Benz USA is rolling out print ads in October titles for the G-Class, R-Class and M-Class with its second-generation BlueTec diesel, carrying the theme "Blue is the new green." Merkley & Partners, New York, handles that push, which touts safety and saving when it comes to fuel, money and the environment, Mr. Cannon said. "Even in a tough economy like we have now, you've got to give people rational reasons to buy," he said.

The first-generation BlueTec, which was first marketed in 2006 as part of the E-Class line, could be sold in only 43 states due to stricter emissions rules elsewhere. Mercedes-Benz also introduced an earlier-generation diesel, the CDI, in its three trucks in late 2007.

Fresh start
Mr. Cannon said the brand's diesel penetration in the 43 states is nearly 20%. But Mercedes "is almost starting from scratch in California" with the new diesels, since it hasn't been able to sell the older diesel models in that major car market for almost a decade.

The BlueTec campaign will also include online this year and events next year. The marketer recently started letting Hollywood stars such as Ms. Bullock and Mr. Dempsey use the new BlueTec models.

Mercedes' new diesel will be sold at a "very small premium" compared with hybrid models, Mr. Cannon said, and will deliver between 20% and 40% improved fuel economy, with highway drivers getting the benefit at the higher end. And whereas it could take six to seven years for gas savings to make up for the higher price of a hybrid, Mr. Cannon said, buyers of the new BlueTec models will break even in half that time.
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