Nissan Maxima sedan
Nissanusa.com
Japanese automaker Nissan plans to introduce a diesel version of the Maxima in the U.S. by 2010.
By Roland Jones Business news editor
msnbc.com
updated 5/2/2007 10:45:23 AM ET 2007-05-02T14:45:23

News that Nissan plans to introduce a diesel version of the Maxima in 2010 may leave a lump in the throat of baby boomers who remember the noisy, smelly, smoke-belching Oldsmobiles that clogged American air in the 1970s.

But those drivers can breathe easy. Like retro fashions, diesel is making a comeback, but it is no longer the dirty fuel of three decades ago.

Nissan’s plans for a new Maxima is just one example of a move to cleaner, fuel-efficient diesel vehicles that could offer motorists a surprising solution to the problem of high gasoline prices, analysts say.

Today’s diesel engines provide 25 to 35 percent better fuel economy than typical gas engines, and thanks to new federal regulations that came into effect last year requiring the use of low-sulfur diesel, they are also much less harmful to the environment than in the past, when many states, including California and New York, banned their sale.

All these factors are driving automakers to take another look at producing diesel-powered passenger vehicles, said Walter Copan, vice president and chief technology officer of Clean Diesel Technologies, a developer of clean fuels.

“When GM tried to make a big push for diesel it was a big flop, both technically and performance-wise, so the image of a smelly, high-polluting and unreliable vehicle was well deserved,” Copan said, referring to the 1970s.

“But that was 30 years ago,” he said. “In the last few years there has been a renewed awareness in the United States of the volatility of fuel prices and a focus on climate change, so increasingly there’s now a push by automakers for more fuel-efficient fleet averages. These are the things that are going to bring the increased application of diesels in the marketplace in the future.”

In Europe, where many countries encourage the use of diesel through lower taxes, diesel vehicles account for 50 percent of all automobile sales, compared with just 1 percent in the United States. Diesel also is not as widely available in the United States, and sometimes the price of diesel exceeds that of gasoline, although currently diesel is about 15 cents a gallon cheaper on average.

Jesse Toprak, executive director of industry analysis for Edmunds.com, an automotive Web site, reckons that over the next few years, diesel sales in the United States could rise to 5 or 10 percent of all auto sales. He said automakers need to get ahead of the trend, just as Toyota did with its popular gas-electric Prius hybrid.

“Automakers can’t ignore diesel, or they will be asking themselves why in a few years if diesel takes off, just as they did when the Prius became so popular,” Toprak said. “It’s all about getting ahead of the curve. When you get into making cars that use alternative fuels you are taking a risk, but the risk is that gas prices will go down and you might find people are more interested in gas-powered cars again. Realistically, that’s not likely to happen.”

An important ingredient in the adoption of diesel-powered cars is their ability to use bio-diesel  made from biological sources such as vegetable oils, said Toprak. If carmakers give drivers the option of saving money on fuel and also the option of being “green,” they will tap into a growing niche market, he said.

“The trick is to convince people that this is not the old diesel,” said Toprak. “They can appeal to a lot of environmentally conscious people as well as those who want to save on gas. After all, the early adopters of the Toyota Prius were mostly interested in making a statement about the environment (rather) than saving money, because back when the Prius first came out buying one made no financial sense at all because of the premiums you paid.”

Diesel may have a leg up on ethanol, a fuel made from renewable plant sources like corn, wheat and sugarcane that some automakers have promoted as a green alternative at the pump. The most common use of ethanol by American drivers is in E85 — a mixture of gasoline and ethanol with up to 85 percent ethanol by volume that can be used in specially modified engines.

But while diesel is widely available at the 170,000 gas stations across the United States, only about 1,000 of them carry E85 said Jesse Toprak.

“For all these new fuel technologies, ease of access to fuel is key to adoption rates,” Toprak said.

Toprak also notes that new federal rules mandating a shift to low-sulfur diesel, which reduces dirty soot, will allow diesels to be sold again in big markets like New York and California.

“Ironically, the northeastern U.S. states and California are the areas that have the highest gas prices,” Toprak said. “So these places are where diesels would be more popular. These states have dense populations, more cars and more traffic, so consumers would be more open to using diesel and it would be a viable alternative to gasoline.”

Already large GMC, Ford, Chevy and Dodge trucks, some minivans and the Jeep Grand Cherokee are available in the United States with diesel engines. Mercedes-Benz and Volkswagen also offer diesel-powered models. In the next few years, consumers can look for diesel-powered versions of the Volkswagen Jetta, Hummer H2 and mainstream Chevy and Ford trucks, Toprak said.

The diesel-engine Maxima is part of a plan by Nissan to introduce more diesel vehicles in Europe, Japan, North America and China.

Tom Appel, editor of Consumer Guide Automotive, said the Nissan move appears to be part of an effort to boost the Maxima, which has lost favor since the ascendance of Nissan's Altima sedan. The Altima sold about 300,000 units in 2006, while some 50,000 Maximas were sold.

“This looks like more of an experiment with the Altima,” he said. “Nissan was very late to the whole hybrid dance, but the automaker wants to be seen as being green for doing something on emissions and oil dependency. The problem is the U.S. market has been extremely reluctant to accept diesel, and only VW and Mercedes have had much luck selling them.”

“But I think the big deal here for Nissan is to have some sort of alternative fuel announcement, and I think this would be much bigger news if they developed a diesel for the Pathfinder pickup truck, or the Nissan Titan truck, because that’s where the impact would be more substantial — those are the high-volume, bread-and-butter vehicles for Nissan,” he added.

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