General Motors Company (GM), Daimler AG (USA) (DDAIF): America Is Ready for Diesel Power

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The advances made in clean diesel technology have been despite the old stereotype of diesel-powered autos being loud, smelly, slow, and unreliable — traits personified by the late ’70s General Motors Company (NYSE:GM) debacle that was the diesel Oldsmobile.

General Motors Company (NYSE:GM)

Today, diesel technology has improved to bring noise, vibration, and smell much closer to that of a gasoline engine while providing 20%-40% better fuel efficiency. Though diesel fuel costs about the same or slightly more than gasoline, this price discrepancy can be attributed to a combination of higher taxes and niche demand.

Not everything is completely peachy in the world of modern diesels. Initial costs are far higher: anywhere from $1200 to over $5000. These extra costs are associated with higher materials costs in the engine blocks and components that handle the high compression ratios and expensive exhaust treatment systems needed to meet emissions requirements.

Another consideration is the availability of fueling locations. Fewer than half of all gas stations in America sell diesel fuel. Away from highways or urban centers, it can be difficult to locate a place to fill up.

On the bright side of these considerations: diesel engines can recoup the initial cost in fuel savings in as little as three years; they are worth significantly more at resale; and they can last twice as long as gasoline engines with proper maintenance.

With these trade-offs in mind, there are substantial opportunities for America’s leading pickup truck manufactures to incorporate light duty diesel engines into one of America’s most popular automobile segments: the half-ton pickup truck.

Ram Truck, a subsidiary of Fiat S.p.A. (ADR) (OTCMKTS:FIATY), is the first company to make this move. Beginning in model year 2014 the company will offer a diesel V-6 option for their Ram 1500 model. While the impressive fuel economy and towing capabilities will undoubtedly attract more consumers to the truck market, it very well could cannibalize sales of the heavy duty 2500 and 3500 models which have had diesel options for years. Pickup trucks are not the only vehicles where diesel engines can find success in America.

Mercedes, a subsidiary of Daimler AG (USA) (OTCBB:DDAIF), has diesel engine options for its S, M, GL, and GLK models that boast 30% better fuel economy, 30% fewer greenhouse gas emissions, and higher torque than their gas engine counterparts.

Other automakers are also beginning to offer diesel options for some of their sedans and SUVs: General Motors Company (NYSE:GM), Jeep, Volkswagen AG (ADR) (OTCMKTS:VLKAY), and Bayerische Motoren Werke AG (ETR:BMW) among others have models available in America with clean diesel technology.

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