GM vice-chairman says only 10 percent of consumers want diesel; car makers must prioritize gas-hybrids and ethanol despite superior diesel fuel economy

January 29, 2008

In Detroit, the vice chairman of General Motors said that only 1 in 12 consumers want modern diesel engines because they cost $3,000 to $4,000 per vehicle, and that the popularity of diesel engines in Germany is the result of punitive tax policies that skew the market, result in gasoline costing $8 per gallon compared to $4 for diesel fuel.

Bob Lutz, speaking at the Automotive News World Congress, said that natural market share of diesel is more like the 8-10 percent seen in Switzerland. Lutz added that GM is developing a full range of diesel vehicles but that ethanol had to be a priority for the car maker because of the popularity of the internal combustion engine.

GM continues to push hard on promotion of E85 and flex-fuel vehicles as an offset to the imposition of stricter CAFE (corporate average fuel economy) standards. Every flex-fuel car sold contributes an offset to each car maker’s CAFE (corporate average fuel economy) standard, under the new Energy Independence and Security Act (EISA) signed last month.
Earlier this month, the energy and environment director for General Motors told the Reuters Global Agriculture and Biofuel Summit that it aims to help 10,000 US gas stations to add E85 pumps by 2011. General Motors assists stations add E85 by locating grant money for conversion and supporting conversions with direct marketing to GM’s base of flex-fuel vehicle buyers.

Recently, the CEO of General Motors, Rick Wagoner, said that the US needs to increase the number of ethanol stations by a factor of 10-15, from 1400 today to as many as 20,000. He added that the company has been working with companies such as Wal-Mart and Target to add ethanol to their fuel distribution services.

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Written by Jim Lane · Filed Under Consumers & Fleets, Research