Who Leads The Pack In The Clean Diesel Passenger Vehicle Sector?

Modern diesel cars have undergone a major transformation in their emissions profiles during the past 20 years. Both the European Union (EU) and North America have implemented stringent light-duty vehicle (LDV) emissions regulations covering diesel vehicles and diesel fuel.

A clean diesel vehicle is classified as one that meets the limits for nitrogen oxide (NOx) or particulate matter (PM) emissions set by the U.S. Environmental Protection Agency's (EPA) Tier 2 standards or the EU's Euro 5 standards. Each of these standards mandates a dramatic reduction from the previous emissions levels allowed. For example, the U.S. Tier 2 standards reduce NOx levels by over 50% and the PM levels by around 90% from the Tier 1 standards.

Europe is the world's biggest market for clean diesel cars, with around 7.3 million diesel passenger cars sold in 2011, according to the European Automobile Manufacturers Association. Diesel's share in new passenger car sales in Western Europe has been increasing since 1997, surpassing 50% of sales in 2004. Demand is primarily driven by diesel cars' superior fuel economy, given the high price of fuel in Europe. Diesel fuel is also less expensive than gasoline in many European countries, giving diesel cars an even greater fuel savings advantage.

Other markets that have not traditionally been strong diesel markets are beginning to open up. In 2011, the U.S. diesel market began to show signs of revival, with 27% growth over 2010. Going forward, the U.S. should see continued demand for all fuel-efficient technologies, including diesel and hybrid.

From 2012 to 2018, we expect that diesels will capture a slightly higher percentage of new vehicle sales compared to hybrids, though both will remain niche drivetrains. Globally, clean diesel annual LDV sales are expected grow from 9.1 million in 2012 to 12 million in 2018, representing a compound annual growth rate (CAGR) of nearly 5%.

Western Europe will continue to constitute the majority of clean diesel vehicle sales even while it experiences slower growth over this period. Diesel will capture slightly less market share in Europe over this period as other fuel-efficient alternatives to diesel become available. Nevertheless, Western Europe will remain, by far, the biggest market for clean diesel LDVs, accounting for around 75% of global sales.

In a recent Pike Pulse report, we analyzed 13 OEMs or automotive manufacturing groups. These companies all rank among the top 20 manufacturers in terms of global sales and also target a range of regional markets. The report does not analyze a few Chinese and Indian automakers that do rank in the top 20 in terms of car sales, but that do not have significant sales in clean diesel markets like Europe or the U.S.

These companies are all players in the global clean diesel car market, but range from those that already have significant market share for clean diesels to those that are only beginning to target the clean diesel market.

We scored the companies on each of the following criteria:

Strategy criteria

  • Vision
  • Go-to-market strategy
  • Partners
  • Production strategy
  • Technology
  • Geographic reach

Execution criteria

  • Sales, marketing and distribution
  • Product performance
  • Product quality and reliability
  • Product portfolio
  • Pricing
  • Staying power

The manufacturers selected are categorized into three main groupings: Leaders, Contenders and Challengers. In the Leaders grouping is the Volkswagen Group – the Volkswagen (VW) and Audi brands. This company has long been a leader in selling diesel vehicles and is making a strong push for emerging clean diesel markets.

In the second main grouping, there are a large number of Contenders, including BMW, PSA Peugeot Citro’n (PSA), General Motors (GM), Mazda, Mercedes, Mitsubishi, Ford, Honda, the Hyundai Kia Automotive Group, Fiat-Chrysler and the automotive partnership of Renault-Nissan.

BMW, Mercedes, PSA, GM, Ford, Fiat-Chrysler and Renault-Nissan all have strength in the European market, with some ability to successfully bring their technology to other markets. Mazda, Mitsubishi, Honda, and Hyundai have less strong diesel market share at present, but are making noteworthy diesel vehicle introduction and are aiming to increase their market share.

The third grouping consists of the Challengers, which are generally sound but face significant hurdles in moving into leadership positions. Toyota is in this category.

The key OEMs in the diesel market are likely to continue to keep their strong position going forward. The question is, will some of the newcomers to this sector be able to compete? The ones that seem best poised to do so as of today are Mazda and GM. In addition, some traditional diesel OEMs are beginning to explore new markets, especially the U.S.

Companies such as VW that are already strong in diesel technology are well-positioned to capture marketshare as the diesel market in the U.S. builds its demand for diesel.
Other OEMs that are focusing on India, including Hyundai and Honda, may be able to capture a significant portion of this market if India adopts clean diesel regulations.

Lisa Jerram is a senior research analyst and John Gartner is research director at Pike Research, a part of the Navigant Consulting Inc. Energy Practice. This article is based on the company's recent comprehensive report, ‘Clean Diesel Vehicles.’ More information about that report can be found HERE.

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