By on April 8, 2014

sergio-marchionne

Bucking a trend that has been gathering steam beyond its traditional European stronghold, FCA head Sergio Marchionne said that FCA’s upcoming product plan, due to be revealed in May, would be light on diesel engines for B and C-segment cars.

Automotive News reports that Marchionne sees no money in placing a clean diesel powertrain into a compact car if it would prevent the compact offering from being “economically viable”:

You can do this on a larger vehicle because of the costs associated with those vehicles. It’s much more difficult to join with a car like [the Chrysler 200 sedan] and keep the margins above normal. Other manufacturers are making the cars. The question of whether they’re making money is a question you should ask them specifically.

FCA has V8 diesels under the hoods of Ram’s heavy-duty pickups, and V6 oil-burners in the Ram 1500 and Jeep Grand Cherokee. But in Europe, diesels are prominent in Fiat and Alfa Romeo vehicles, particularly in countries where the fuel is subsidized (and gasoline prices are rather high). It would be difficult to imagine these smaller diesels going away entirely, but the oil-burning powertrains will certainly not make it to North America.

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46 Comments on “Marchionne: No Money In Small Diesel Cars...”


  • avatar
    vent-L-8

    Well now that he has Jeep and Ram underwriting the entire operation I can assume the pressure’s off to squeeze every last dime out of european penalty boxes…

  • avatar
    3800FAN

    He’s 100% correct. Do the diesel math all you want you’ll always end uplosing $$$. The vw jetta, the most affordable diesel in the us falls behind its new 1.8t gas motor and hybrids in TCO. Same with the Chevy cruze diesel and passatt diesel. The diesel mpg boost savings will never outbalance the diesel fuel higher cost and the diesel motor higher cost over the life of the car. That’s why people dont buy diesels and get hybrids and that’s why FCA isn’t gonna waste rnd $$$ on small diesels.
    Oh its also the reason there’s no us Mazda 6 diesel AND NEVER WILL BE!!!

    Vw and gm throw in extra options with the diesels to make it look like the diesel upfront cost isn’t as big but to that I say so what? Its the diesael I want not this extra option crap…if anything it makes the diesel cost more since you get all these options you could do without with the gas motor.

    • 0 avatar
      darex

      LOL@rnd (among other things)

    • 0 avatar

      Its too bad as diesel is the better technology and diesel fuel costs less to refine. We tax diesel at a higher rate than gasoline in an effort to derive extra tax revenue to maintain highways from those who cause most of the maintenance to have to be done, heavy over the road trucks.

      There has to be a better way. But our political system seems to allow no pure solutions.

      • 0 avatar
        FormerFF

        The difference in taxes between diesel and gasoline averages less that 6 cents per gallon. Most of the price difference is due to the market.

        http://www.api.org/oil-and-natural-gas-overview/industry-economics/fuel-taxes

      • 0 avatar
        Scoutdude

        Sorry but the tax difference does not account for the premium charged for diesel.

      • 0 avatar
        sportyaccordy

        Bzzt, wrong.

        http://www.theguardian.com/uk/2013/jan/27/diesel-engine-fumes-worse-petrol

        Granted, this might be due to old, dirtier diesel vehicles and the prevalence of big diesel trucks. But AFAIK even with this urea stuff diesel is still dirtier. Once someone creates the ignitionless gasoline engine diesel will fade into irrelevance

        • 0 avatar
          bigdaddyp

          Bzzt, someone already has, the problem is that it only works well in a very narrow set of conditions. Outside those parameters, performance is not very good and emissions are too high. Plus there’s the additional technology required to make it happen.

          My guess 7-10 years before it becomes a mainstream technology.

  • avatar
    Hummer

    From what I’ve been reading (which obviously isn’t first hand account) many Europeans are starting to turn away from diesels, dpf and the rest of the newer emissions equipment simply make the cars too expensive to run and leave no resale.

    Again this is just second hand reading from UK forums, but none the less it could be the beginning of the end if the emmisions requirements don’t loosen.

    • 0 avatar
      Battles

      This is dead on but there’s no way emissions regs will loosen, they’re only ever going to get more strict.

      RE the problems with modern diesels, there are DPF problems that can leave a three year old car unable to pass the annual emissions test
      Modern diesels are supplied with dual mass clutches for potentially valid technical reasons but they are wildly more expensive than most consumers expect. There’s a growth area in retro-fitting normal clutches, which is an unexpected bonus for some smaller garages and workshops because it’s a job that most main dealers won’t undertake.

      There are probably equivalent problems with new technology in modern petrol engines too (the issues with Fiat’s TwinAir engines spring to mind) but a lot of people are starting to realise that the perceived savings of running a diesel only manifest if you do massive mileages (by Euro standards, maybe 20k per year).

      • 0 avatar
        Tom Szechy

        Battles,
        Dual-mass flywheels are common in modern petrol engines as well, I drive a 2011 Golf TSI with DSG gearbox, and it has DMF too.

        Retrofitting DMFs with “regular” flywheels pose a rist to the whole drivetrain as one of the reasons they are there is to eliminate a lot of the vibration created by these engines. If you don’t have the DMF to compensate that, you’ll end up with the engine mounts (and everything else!) taking up more stress.

        TL;DR: DMFs are installed to cope with vibration. If you replace them with regular flywheels, you’ll end up more issues in the drivetrain.

    • 0 avatar

      I don’t know. Germany did a cash for clunkers, which meant that almost all the cars on the road last year were new. The vast majority were diesel. Diesel was the same price as gas when I was over. I went to a BMW dealer and was amazed to see it looked pretty much the same, but the vehicle mix was different. There were two gas cars of sixty or so…a used e46 wagon and an e90 335i with all the options.

      Whether it was a 5 Series GT, or a 116, it was a “d”.

      Here, diesel is usually the same price as midgrade, which works out. What sucks is when you get a winter like this, the price spikes in tandem with the price of heating oil. Summer can’t come too soon.

      The illegal workaround for farmers is to buy “red diesel”, which isn’t taxed, and use that instead….just don’t get caught.

  • avatar
    Onus

    The article states “V8 diesels under the hoods of Ram’s heavy-duty pickups.” This is incorrect. The 6.7 cummins in the Ram heavy duty is an inline 6 diesel.

  • avatar
    FormerFF

    In England, at $8.50 per gallon, I think I’d want a plug in hybrid. In light vehicles, the diesel doesn’t generally pay for itself.

    Trucks and buses, that’s a different story.

    • 0 avatar
      Battles

      In light vehicles that do high mileages, it DOES pay for itself.
      In a low annual mileage application, an LPG or hybrid bus would be a better shout.

      • 0 avatar

        Any technology that uses batteries needs to add in the cost of regular replacement while the typical diesel runs 300K miles or longer before major service.

        • 0 avatar
          Tom Szechy

          “typical diesel runs 300K miles or longer before major service”

          A typical modern diesel will run ~100k miles until its first common rail problems. Fixing that will easily cost you 2-5k USD, depending on the actual common rail system.

          If you don’t kill your turbo, it will give you not more than ~200k, again a nice sum to replace.

          Then, you’ll also have problems with your engine oil getting thinner in _modern_ diesels (has to do something with the lack of DPF regeneration cycles in certain usage patterns) – http://www.honestjohn.co.uk/forum/post/index.htm?t=102168

          Oh yes, and the DPF…

        • 0 avatar
          FormerFF

          The service history we have on early Priuses indicates that most of the time the batteries last the lifetime of the car. Current hybrid cars have 8 year/100,000 mile warranties on the hybrid specific parts including the battery pack.

  • avatar
    Tom Szechy

    As far as I know (living in Europe), diesel passenger cars have no real market share, outside of Europe.

    In the last couple of years, European manufacturers (them being in the forefront of diesel development) have been looking for new markets for their soot machines just to recover the interstellar dev costs and so boost their crappy ROI. But I think they made the wrong bet when they thought diesels will be universally accepted around the world. They are not, at least not in passenger cars.
    What Marchionne says just underlines that, and I’ve heard similar statements recently: this is from the head of Ford Europe’s product dev: http://www.autocar.co.uk/car-news/industry/diesel-dominance-threatened-eu-emissions-rules .

    The ever-demanding emission standards resulted in today’s situation where manufacturers have to implement high-tech and sensitive auxilliary systems in their new diesels.
    It’s getting more and more publicity that these will cost you an arm and leg to maintain in the long run – that is 3-4 years after purchase.

    But if you don’t even consider the economic side, concerning health issues only (sub-PM10 particles that no DPF will filter out), I really hope we’ll shelf diesel tech soon so it becomes something you can see only in trucks or a museum.

  • avatar
    Quentin

    *grabs popcorn like our Hypnotoad friend is wont to do*

  • avatar
    slance66

    In Europe the tax structure drives the consumption of these cars doesn’t it? So it’s a phony market. In the U.S. our high diesel prices makes these cars non-starters for most. Small ICE engines or hybrids provide better value. Diesel should play a bigger role in our trucks and SUVS though, and if they could get the cost of diesel down to about the same as plus (89) octane gas, it would help. Honestly I don’t know why anyone needs better mileage than is available in an ICE Civic, Cruze, etc.

    • 0 avatar
      FormerFF

      ” if they could get the cost of diesel down to about the same as plus (89) octane gas”

      On the average, diesel fuel is taxed around 7 cents per gallon more than is gasoline in the US, depending on the state tax level, so the “they” you are referring to is the marketplace. Considering that diesel contains about 15 percent more heat per gallon than does gasoline, and it’s much more economical to run heavy vehicles on diesel, so I’d expect diesel to remain 50 cents or so per gallon more expensive.

      • 0 avatar
        DC Bruce

        Well, no. The increased BTU density of diesel over gasoline has always been present. However, until the advent of ‘ultra-low sulfur’ highway diesel, diesel fuel has been priced at around the price of regular gasoline in the U.S. — or less. (I owned a diesel-powered car from 1980 to 1987).

        What’s changed is that the “new” diesel is, apparently, much more expensive to refine. I’m not sure if the tax difference between diesel and gasoline is a new development or not.

        In addition, “clean diesels” are not as fuel-efficient as their “dirty” predecessors.

        If you take, for example, the test results of pickup trucks dot com, comparing diesel powered and gasoline powered HD pickup trucks towing a 10,000 lb. trailer, the diesels show a pretty consistent 20% fuel economy advantage of the diesel-powered over the gasoline-powered model. However, when you back out the 10% or more price premium of diesel fuel over regular gas, the payback period of the diesel looks pretty long unless you’re driving 20K miles/yr. And that assumes that maintenance costs will be equal . . . which may not be the case.

        • 0 avatar
          FormerFF

          Most sources place the additional cost of ULSD at around a nickel. Cleaner versions of gasoline, especially those used in summer blends, are more expensive than older, dirtier burning gasolines as well.

          Diesel used to be cheaper than gasoline, that is no longer the case, and most of that is due to market forces.

  • avatar
    slance66

    In Europe the tax structure drives the consumption of these cars doesn’t it? So it’s a phony market. In the U.S. our high diesel prices makes these cars non-starters for most. Small ICE engines or hybrids provide better value. Diesel should play a bigger role in our trucks and SUVS though, and if they could get the cost of diesel down to about the same as plus (89) octane gas, it would help.

  • avatar
    Lou_BC

    Preliminary studies indicate that gasoline direct injected turbo engines produce as much fine particulate as diesel engines. If those preliminary studies prove correct and the green movement takes hold, we will see DPF on gassers. If that happens diesel engines will be a better choice.

    • 0 avatar
      Hummer

      If that happens restoring cars less than 15 years old will make business sense. That and selling more vehicles without an engine to allow the end user to install the engine/get around strict standards.

      But then I’m looking at it to an extreme measure…

    • 0 avatar
      Tom Szechy

      I think we’ll be all better off with CNG/LPG based hybrids in the end.
      Propane and natural gas are the cleanest burning fuels cars can use today.

  • avatar
    FreedMike

    You mean there will never be a Dart wagon with a six speed manual and a diesel? How dare they? Don’t they know VW used to sell at least 816 diesel manual Jettas a year?

    THEY’RE THROWING AWAY A FORTUNE!!!!!!!!!!!!

  • avatar
    stingray65

    There is no free lunch. If regulation and the market demand high fuel economy, low emissions, and good performance there is technology to provide it, but it is expensive to buy and maintain and it may reduce the economic life of a vehicle giving back at least some of the environmental benefits through more frequent car replacement. Hybrids use extra batteries and electric motors and exotic gearing systems that add cost and potentially expensive repairs. Clean diesels use turbos, direct injection, DPF, DMF that also add expenses. Now gasoline engines are increasingly using turbos, direct injection, and DMF that add expense and potentially shorten life. All these clean vehicles also require cleaner fuels that are more expensive to produce, which further reduce the economic benefits of the new technology. Cheap, clean, fast – you can have any two, but not all three.

    • 0 avatar
      FormerFF

      I wouldn’t call the CVT that’s in most hybrid cars an exotic item. It’s basically a planetary gearset with three inputs: a drive (electric) motor, a motor generator, and the engine. These cars do have the additional motor, generator, inverter, and batteries, but they do away with the starter, alternator, torque converter, and pump that a conventional car with auto trans would have.

      Honda has gone one step further in eliminating the CVT on the Accord plug in. It does have a clutch, though.

      • 0 avatar
        stingray65

        CVT’s were until recently at least been considered pretty exotic. I also don’t think Toyota, GM, etc. would have needed to spend over $1 billion to develop hybrid technology if it was not somewhat complicated. Whether you believe it is simple technology or not, however, I think it would be difficult to argue that these new technologies are more expensive than the simpler previous versions.

    • 0 avatar
      Hummer

      Cheap and fast, the emissions is what moved consumers in 1/2tons and is what will move them into 3/4s as 1/2s descend the same road as cars.

      Chevy double cab, standard bed, w/ 4×4
      ’14 1500 w/ 5.3 & 3.08 rear end = 35,770 before cash back
      ’15 2500 w/ 6.0 & 4.10 rear end = 37540

      I made as similar as it would allow, both are the most base 4×4 you can get, but I added the small v8 to the 1500 to make a better comparison. The V8 adds only $1100 so even lacking the V8, the 2500 is a only slightly more with stronger components and a proven engine w/o all the fuel economy mess.

  • avatar
    danio3834

    I like it when Marchionne makes an honest attempt to explain why certain things are the way they are. The small diesel pickup brigade may still refute him, but he tried to put it in as simple blunt terms as possible.

    • 0 avatar
      highdesertcat

      Yup, I agree! In the end it has to make economic sense to the well-being of the company, in this case Fiat, to offer a product to the buying public.

      They’re not in business to be benevolent and lose money for their owners/shareholders. They’re in business for profit and to make money for their owners/shareholders.

      And the vast majority of the buying public does not see a small diesel in their future. I’ve had one diesel passenger car and I don’t want to go there again. The extra mpg do not offset the additional cost of the diesel fuel, and the added cost of the maintenance, nor the smell, the soot and the crud that builds up on these oil burners.

      However, as a proponent of choice and “The more the merrier”, I think small diesels should be offered for those who want to buy them, if the automaker can find a way to just break even on each sale.

      And that! may be the problem. In the US it is unlikely that small diesels will make money for the manufacturer since the vast majority of buyers go for the gusto, the gasoline-fired ICE.

  • avatar
    Lampredi

    “FCA head Sergio Marchionne said that FCA’s upcoming product plan, due to be revealed in May, would be light on diesel engines for B and C-segment cars.”

    That makes perfect sense, because in order to put diesel engines in B and C segment cars, one needs to *make* B and C segment cars. ;)

  • avatar
    Big Al from Oz

    Ford did a study in 2004 and came to the same finding, hence the Eco Boost engines.

    Ford’s finding was that the initial outlay for a vehicle with a gasoline engine made it an easier item to market.

    Ford did recognise that diesel was the better option over the longer term.

    I wouldn’t write diesel off yet. As vehicles increase in size the viability of diesel becomes more apparent.

    How many have a diesel whipper snipper (weed eater) or chainsaw?


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