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back to index backEUROtalk September,  2005

Japanese Makers Face European Dilemma: To Build Or Not To Build New Generation of High-End Diesels

Japanese automakers have come to a turning point in European diesel powertrain development, at which they must decide whether to invest in new classes of large engines or, in the case of Toyota, try to do it with hybrids, writes Nikkan Jidosha.

The problem the Japanese face is that diesels now power more than half the European new car fleet, and in some luxury classes, the ratio is well over that. While all of the Japanese are able to offer low- and medium-end diesel powerplants in the 1.5- to 2.5-liter range, none has a 3-liter or larger V-6 suited to large luxury sedans. The decision on whether to offer such engines presents them with a real strategic conundrum. The makers must consider whether they can achieve the sales volumes they want by making investments that will run into many billions of yen (tens of millions of dollars), or they should forget about it and try to satisfy European consumers in other ways.

The paper said one Toyota executive involved in mapping out a European strategy for Lexus told it that we are planning to push hybrids, but it's also possible that we will have to develop a diesel” V-6 to supplement the 2.2-liter V-4 currently offered in the Lexus IS. That's because in comparison with the high-end offerings from BMW, Mercedes and Audi, even the hybrid Lexus is distinctly underpowered—especially for travel on the European no-limits superhighway network.

Toyota's dilemma is whether it should sink those tens of millions into not only the R&D for a new diesel but construction of a factory to make it, or invest the money in trying to give its hybrid powertrains more kick.

Honda faces a similar problem. It plans to use a new 2.2 liter direct injection diesel V-4 it has developed in several different models. It will be offering diesel power in as many as half the CR-V small sport utilities it sells there, in 40% of its mid-range Accords, and in 30% of the remodeled, low-end Civic lineup.

Diesel Takeoff

President Takeo Fukui told the paper that he doesn't want to think about developing a new and larger class unless diesel sales really take off not only in Europe but in the U.S. because of skyrocketing fuel prices. But that remark was made before Katrina put a skyrocket under U.S. gas prices, bumping them up by a dollar a gallon and more in some places.

Mazda's main diesel offerings currently are a turbocharged 2-liter in the Atenza (Mazda6) sedan and Premacy minivan, and a smaller category of 1.4-and 1.6-liter diesels jointly developed by Ford and Peugeot, and made by Peugeot for Axela and Demio.

Mazda Direction Different

Faced with the fact that the Ford Group as a whole doesn't have much diesel knowhow. Mazda might go an entirely different direction, says Nikkan Jidosha. It could opt to lead development of a new small diesel for the Ford group and to build a larger V-4 gasoline direct injection engine for its bigger vehicles.

Nissan, which is able to procure all the diesels it needs from parent Renault, is currently using them to power almost one of every two vehicles it makes in Europe, the paper observed. Outsourcing is a choice for the other makers as well, but its down side is higher costs.

Unable to decide just yet, the Japanese makers have no real option but to wait until they see where consumer demand is headed, says Nikkan Jidosha. But given the rise in fuel prices and the European penchant for life in the fast lane, it's a good guess that those decisions aren't too far in the future.

To request a free, sample copy of the Japan Automotive Digest, click here.

Source: The Japan Automotive Digest

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