Chrysler's plan to sell a diesel version of its Jeep Grand Cherokee SUV in North America shows the company is heading in a different strategic direction than most of its competitors.
In addition to the Grand Cherokee, Chrysler is likely to introduce diesel engines on the Jeep Wrangler, Dodge Durango and possibly other SUVs.
"We think that the market is ready to listen to a diesel story," Chrysler and Fiat CEO Sergio Marchionne said last week.
Today's improved diesel engines are more fuel efficient than gasoline engines, but they cost as much as $1,500 more.
Some automakers -- such as Ford, General Motors, Honda and Toyota -- have put more effort into developing hybrid or electric vehicles.
"To some extent, it's a cultural thing," said Mike Omotoso, senior manager for powertrain forecasts for LMC Automotive. "The Chrysler powertrain strategy is really being driven by Fiat, and Fiat is a European company specializing in small diesel engines."
Marchionne said 90 percent of Jeep Grand Cherokees sold in Europe have diesel engines because gas prices in Europe are substantially higher than in the U.S. In Europe, Chrysler uses a diesel engine made by VM Motori, an affiliate of Fiat, which owns 58.5 percent of Chrysler.
In the U.S., Chrysler produces the Grand Cherokee and the Dodge Durango at the same plant in Detroit.
"Once we install a (diesel) in a Jeep Grand Cherokee, the installation on the Durango is rather easy," Marchionne said.
Mike Manley, president and CEO of the Jeep brand, said Jeep enthusiasts have long clamored for a diesel version of the Wrangler.
"Off-roaders like diesel because of the torque that it brings to the vehicle," Manley said. Ford, in contrast, is pressing forward with its direct-injected, turbocharged engines marketed under the EcoBoost name for cars, crossovers and SUVs.
Ford expects to build about 560,000 EcoBoost engines this year and 1.5 million annually by 2015. On F-150 pickups, about 40% of Ford buyers have opted for these smaller engines.
"Our diesel strategy is focused on (larger) trucks," said Mark Fields, Ford president of the Americas, referring to Super Duty pickups, 60 percent of which are sold with diesels.
John Krafcik, president and CEO of Hyundai North America, said he would rather spend the additional money it takes to develop and build diesel engines on improving gasoline engines.
Over the last several years, Hyundai has launched four cars that get 40 m.p.g. on the highway with direct-injected gasoline engines (Veloster, Elantra, Accent and Sonata). In 2011, Hyundai sold 214,132 of those models.
"If you can get your gas engine within 13 percent of the efficiency of a diesel engine, it makes it worthwhile," Krafcik said.
Historically, American consumers have been reluctant to buy cars with diesel engines because they remember the smelly, loud cars automakers sold in the 1970s and 1980s.
Also, diesel fuel costs more than gas in the U.S. According to AAA, diesel fuel is selling for an average of $3.87 a gallon in the U.S. compared with an average of $3.39 for unleaded regular and $3.66 for premium.
But a diesel engine is about 30 percent to 35 percent more fuel efficient than a gas engine in the same vehicle.
Joe Bakaj, head of Ford powertrain engineering, expects more diesels in North America after 2016 when European emissions standards change to become closer to U.S. regulations.
Europe regulations are aimed at carbon-dioxide emissions while the U.S. regulations center on smog-producing nitrogen oxides, making it expensive to create different systems in each region.
Next year, GM plans to add diesel versions of its Chevrolet Cruze and Cadillac ATS, a compact car revealed this week at the Detroit auto show.
Volkswagen began selling cars with diesel engines in the mid-1980s. Today, the German automaker offers five cars and crossovers with diesel engines. Last year, about 70,000, or 21 percent of the 324,000 cars and crossovers sold by Volkswagen in the U.S., came with diesel engines.
Audi will offer a choice of gasoline or diesel in the Audi Q3 Vail compact crossover to be in the U.S. in 2014, said Audi of America President Johan de Nysschen.
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