Europeans love their diesels, with over 50% of the cars on the road running on diesel fuel.
Here in America, it’s a different story, though. Just 2.6% of the cars are diesels. J.D. Power says that will grow to 8% by 2015, still a sliver compared to Europe.
Volkswagen wants to own that sliver. While everyone else is looking at electrics and hybrids, VW is pushing its clean diesel line.
We spoke with Mark Barnes, COO of Volkswagen America, about the shifting auto landscape.
TBI: What does the market look like for diesels?
Right now we have diesel in our Jetta SportWagen, in the Jetta, in the Tourag, and we have it in our Golf. In the new version of our Golf 2010 model. We are penetrating very high on the SportWagen. About 90% of the SportWagens we sell have the TDI power train in it. With regard to the Jetta, it’s about 30% have the TDI. With regard to the Tourag, we are about 20%. And it’s a little bit too early to tell for the Golf, but we are forecasting right around 30%.
TBI: What is the advantage of a diesel over a hybrid?
It’s a fantastic power train. It gives very good fuel economy. It’s also good for the environment because it puts out 25% less greenhouse gas emissions than what a gasoline engine would. And thanks to the uniqueness of the TDI motor, it cuts out the particulate emissions by 90% and the emissions of nitrous oxide are cut by 95%. So, a very very clean running engine. Clean enough to be certified in all 50 states. It’s just like driving a high-powered gasoline engine so you are not giving up one bit of the driving experience that you’d expect from a regular gasoline engine.
TBI: Why shouldn’t I buy a Prius?
I can’t speak for the Prius but I’d love for you to buy a TDI because you are going to get all the pieces that I spoke of, plus when you buy a Volkswagen TDI you’ll get carefree maintenance, so your maintenance is paid for the first 3 years, 36000 miles. You’ll also receive ESC, which is the electronic stability control and that is very good from a safety standpoint. Frankly you are going to get a Volkswagen, which is a very very good car, high quality, and high durability.
TBI: Are you expanding into hybrid market?
Next year we will have a hybrid Tourag so we’ll be getting into the hybrid market in our larger-sized SUV product.
TBI: Why shouldn’t I wait until the Volt comes out?
The Volt will bring a very unique piece to the industry. It will be a plug in, an electric vehicle. Certainly the Volt will be a very interesting vehicle once it is received in the United States. The Volt also will have a very limited range where the TDI products have a very strong range. In fact, diesels have 30% higher fuel economy than the gas engine, and we also hold the world record for miles per gallon. Really, its almost 68 mpg for the Volkswagen TDI.
TBI: How do you re-brand something that’s dirty like diesel as something that’s green?
The way we’ve gone about it is through a number of communication pieces. One of them we’ve used is TDI Truth & Dare. It is a very good website that compares some older diesels versus the current TDI clean diesel. And one of the things we do is we put coffee filters over the exhaust pipes of both cars. We let them run for five minutes and after they are done, we take them off and the older diesel product (not a VW diesel) has a round sooty spot on that coffee filter. Ours is very clean. In fact they actually make coffee out of the filter that was attached to the Volkswagen clean diesel tail pipe and they drink it.
TBI: Are Americans switching their buying habits?
During the Cash For Clunkers period, Volkswagen did very well as did other companies, but the number one selling vehicle for us during that period was our TDI vehicles—the Jetta and SportWagen. They did quite well under the Cash For Clunkers and introduced a lot of people to diesel that may not have been associated with diesel in the past. I think we are bringing people to the brand because of the clean diesel TDI and its working very well for us.
TBI: Was Cash For Clunkers a good or bad idea?
From a company standpoint, the CFC did wonderful things for the industry in that period. For the first time all year, vehicle sales were above prior year so it did bring a lot of sales into the business. From a Volkswagen standpoint, it really introduced a lot of people to our TDI products, our new passenger minivan did very well under Cash For Clunkers.
TBI: Do you have any numbers on what happened in the month following CFC on TDI?
Diesels did very well. We were very low and were depleted on the SportWagen TDI and did not get any into our dealerships until the last few days of September. And despite that, we still sold almost 800 TDI SportWagens in the last few days of the month. That points to me that it’s still doing very well for us.
TBI: When do you see sales bouncing back?
We see a controlled growth happening next year. We see the industry coming in at about 10 million this year and we think next year the industry will be around 10.5 million. We don’t really foresee the type of sales that were happening two years ago when we were in the 15 to 17 million range, we don’t see that type of growth happening for quite some time, certainly not in the next five years.
We think the industry is very healthy but we also see the industry going through some changes obviously. We just don’t see the car buying experience being number one on people’s lists in the next few years.
TBI: What happenes when gas is 4 bucks a gallon, and oil is $100 a barrel? Why do I want a diesel then?
There’s even more reason that you want to buy a diesel at that point. We saw it last year when gas did hit $4 a gallon. Diesel fuel at that point was just slightly above gasoline. The benefits of the diesel and the distance you receive, the range you get on one tank of gas, combined with the fact that you are getting 30% higher fuel economy than you do with gasoline. The Volkswagen TDI receives tax credits because of its high fuel economy. We receive on the Jetta $1,300 tax credit, and on the Golf up to about $1,700 tax credit.
There are a lot of great things happening from the diesel stand point. But even if you brush those aside, just the fuel-economy, the driving experience and the range on this vehicle, really pays off.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.