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It May Be Diesel's Turn to Shine As Americans Yawn at Hybrids

American consumers are boosting their interest in — and loyalty to — clean-diesel engines at the same time they’re demonstrating more and more indifference to hybrids.

So far, Volkswagen — both with its VW and Audi brands — BMW and Mercedes-Benz have provided all of the impetus behind the nascent clean-diesel trend in the U.S. market, with increasingly popular diesel-powered versions of the Volkswagen Passat, Jetta and Golf, Audi A3 and Q7, BMW x5, and Mercedes-Benz M-Class and R-Class. And the German marques, especially VW and Audi, keep doubling down on the diesel franchise.

“Repurchase loyalty” for diesel powertrains increased by nearly 10 percentage points last year compared with 2008 while consumer repurchase rates for hybrid technology remained about flat at 35 percent, according to new data compiled by R.L. Polk. Diesel’s jump in repurchase loyalty as measured by Polk hasn’t been reported, while news about hybrid-repurchase trends was widespread yesterday.

Diesel-repurchase loyalty was up by about 9 percentage points over the three years, to 28 percent last year from 19 percent in 2008, reported the Southfield, Mich.-based auto-research firm. Meantime, the repurchase rate for hybrids, as previously reported on Forbes.com, fell to 35 percent last year, back to about where it was in 2008 after a two-year rise that peaked at nearly 40 percent in 2009.
“Diesel represents a high-fuel-economy alternative,” Brad Smith, director of Polk’s loyalty-management practice, told me. “Diesel [fuel] prices are still pretty high, but the increased range you get, as well as some longevity factors with diesel powertrains, create some opportunities to retain loyalty for the diesel type.”
And Smith said he expects diesel-repurchase rates to climb even higher in coming years as American domestic manufacturers add selective clean-diesel options to their mainstream vehicle fleets, joining the German brands that have been the vanguard for the return of diesel powertrains to the U.S. market over the last few years.

“The more diesel product offerings are available, that creates more opportunities for owners to be loyal to the fuel type,” Smith said. However, he noted that a proliferation of new hybrid models hasn’t boosted Americans’ loyalty to hybrid powertrains.

Volkswagen, for example, has been stunned by the quick uptake for a brand-new clean-diesel version of the Passat mid-size sedan that it makes in Tennessee: 20 percent of new Passat sales are for VW’s Turbo Diesel Injection clean-diesel option.“Considering it’s a new offer, that’s a remarkable rate of adoption,” said Jonathan Browning, CEO of Volkswagen of America. “That’s great acceptance from the customer point of view and bodes well for continued demand for diesels across the marketplace as we go forward.”

View Full Story on http://www.forbes.com/sites/dalebuss/2012/04/10/as-americans-yawn-at-hybrids-it-could-be-diesels-turn-to-shine/