VW made a huge mistake by trying to sell diesel cars in the US

The number is vehicles affected worldwide by Volkswagen’s emissions-cheating scandal is staggering: 11 million.

Of those, less than 500,000 were sold in the US, over model years 2009-15.

The relatively small, 2.0-litre TDI engines that US investigators found were faking nitrogen-oxide emission levels during testing had a cult following, and they were helping VW meet US fuel-economy standards.

But they represented a minuscule portion of overall sales in a market that in 2015 is surging to a 17-million new-vehicle pace. VW holds only 2% market share in the US.

TDI engines were a good advertisement for VW in the US. Auto enthusiasts in the media tended to like them, seeing “clean” diesel, with its decent performance, as a Teutonic alternative to pokey gas-electric hybrids. The technology was intended to change hearts and minds about diesel, which Americans remember as being sooty and loud when they were more prevalent in the 1970s and ’80s.

It was tough to find much good to say about how VW was executing on its ambitious US objectives. But you could throw some mild props toward the car maker by praising the TDIs.

Hindsight is brutal

In retrospect, bringing the small TDIs to America now looks like the worst in a series of bad decisions that have doomed VW’s US fortunes.

Whatever VW gained in the US from being one of the few automakers with mass-market diesel offerings has now been completely overwhelmed by the very big negative of selling a diesel engine that for years has been using nefarious algorithms to fool smog checks. (VW Group sibling Audi also sells diesels, as does BMW, but VW’s only real rival in small oil-burners is Chevy.)

The government isn’t happy. Customers feel betrayed. At VW, it looks as if heads are going to roll.

Volkswagen Jetta TDIVolkswagenA TDI Jetta.

Worse, it’s worth noting that the vast majority of American car buyers actually aren’t interested in small diesels. If you are a diesel customer, you’re buying a big truck and need a lot of torque to pull around heavy stuff. VW completely misjudged this aspect of the market — it should have been trying to more aggressively sell Americans vehicles that burned gas.

It also should have been angling more boldly for a recovery in the SUV market.

Gas-powered SUVs are driving US automaker sales and profits, and while VW is selling those vehicles, it isn’t selling very many, relative to GM, Ford, Honda, and Toyota.

A victim of success

In this context, VW was a victim of its success internationally. This is the world’s biggest carmaker, after all. It didn’t want to pursue a bespoke product strategy in the US; rather, it wanted to sell to Americans what it was selling to Europeans.

But even though there have been rumblings in Europe for years that the real-world performance of the many diesels on the road there didn’t match emissions tests, it was in the US that VW got busted for cheating.

We don’t know when VW determined that its NOx technology in the TDIs didn’t work and had to fiddle with the software. We do know that VW was proud of the tech — it thought it had cracked the code on a challenge for small diesels. But what looked like an innovative if ill-fated new diesel technology now looks as if it could become the biggest liability in VW’s long history.

And it shows to foolishness of making something that seemed too good to be true — a clean, powerful, fuel-efficient diesel for small cars — a cornerstone of a comeback in the US.

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