From Autoweek

DETROIT - The U.S. market for diesel-powered vehicles - formerly the exclusive domain of boat-towing pickups and German luxury cars - is reaching critical mass.

Last week, Automotive News revealed that General Motors plans to equip the Saturn Aura and a Cadillac sedan with diesel engines by 2010.

With GM’s confirmation last week that it will offer the fuel-saving engine in cars, crossovers and light trucks, diesels should easily outpace U.S. sales of hybrid-powered vehicles.

Siemens VDO Automotive Corp. - one of the largest suppliers of diesel fuel injection systems - projects U.S. diesel sales will grow to 867,000 units in 2012, up from an estimated 653,000 units this year.

By contrast, sales of hybrid vehicles are projected at 510,000 units in 2012, up from an estimated 193,000 units this year.

Except for a few thousand Mercedes cars and Jeep Grand Cherokees, all diesels sold in the United States this year will be heavy-duty pickups. That will change early next year when Volkswagen’s new diesel engines arrive in the Jetta, New Beetle and other models.

Around 2010, Toyota, Honda, BMW, the Chrysler group, Nissan, Audi and others will introduce diesel-powered cars and SUVs. Among major automakers, only Ford Motor Co. has no plans to offer diesel cars. Ford says the diesel is too expensive for passenger cars.

Hell freezes over

Diesels are getting another opportunity because they offer 30 percent better fuel economy than comparable gasoline engines. Major refinements also have transformed the diesel from the sluggish, chattering, smoke-belching engine many people remember from the late 1970s and early 1980s.

At that time, GM converted an Oldsmobile gasoline engine to run on diesel fuel. It was so awful that it destroyed the U.S. market for diesels. Even Mercedes-Benz quit back then.

Not so long ago, one might have expected hell to freeze over before GM dared to reintroduce diesel-powered cars.

Now, GM is developing at least two diesel engines. One is a 4.5-liter V-8 slated for the Hummer H2 SUV and the Chevrolet Silverado and GMC Sierra pickups. The other is a 2.9-liter V-6 being engineered in Europe by VM Motori S.p.A., an Italian engine maker.

In his blog on GM’s Web site last week, Vice Chairman Bob Lutz confirmed that the automaker will offer the new diesels in a couple of years. Lutz said the diesels will be sold in all 50 states.

The first GM cars to get diesels will be the Saturn Aura sedan and probably the Cadillac CTS, says a GM source with knowledge of product plans. The European CTS will use that same 2.9-liter engine in Europe. Crossovers would come next.

‘Prettiest green hat’

Dealers are excited about GM’s plans for diesels. “It makes so much sense,” says Alan Starling, who owns a number of GM stores in Florida. “GM has got great technology from Europe.”

Starling, a former chairman of the National Automobile Dealers Association, says he is not worried about GM’s history with diesels. “Those memories are painful for all of us,” he says. “But I would rather have that discussion than not see customers at all.”

Ed Williamson, a Miami dealer who sells Cadillacs and Hummers, predicts the new diesels will dispel lingering memories of GM’s past. “People will realize this is not a gasoline engine converted to diesel,” he says.

Williamson says diesels will appeal to consumers concerned about the environment.

“Look at what people are willing to pay for the Toyota Prius or a Lexus LS 600h,” he says. “More product and innovative technology is always good. Everyone is trying to wear the prettiest green hat.”