Only Slightly OT: Diesel Vehicles Revved Up for U.S. Sales
>>>So there it is. Stop screwing around with the Prius, etc. Just get on eBay and buy a 4,000 pound mid '90s Mercedes diesel, kiss any emission inspection nonsense goodbye, get 35 mpg, drive it for 15 years and/or 200K miles, then sell it to a recent college grad for $3K - in inflated dollars of course.<<<
Banc of America Securities
FOREIGN AUTO MAKERS ARE INCREASINGLY planning on selling their diesel-engine-equipped vehicles in the U.S. This makes sense based on oil supply and diesel-engine performance.
However, it looks like U.S. diesel consumers will need to petition the government to reform a roughly $3,000-per-vehicle emission after-treatment cost penalty and/or join the high majority of other countries that incentivize diesel use through taxes.
For now, it appears as if the U.S. government has made the health of the U.S. Big Three the priority.
We think this could change, over the long term.
U.S. tax and emission structure inherently favors gasoline engines. But the U.S. is missing out. We estimate that based on the natural output of vehicle fuel from a barrel of crude oil, diesel engines should be 30% of the U.S. market.
Europe is roughly 45% penetrated, but U.S. penetration remains below 3%. Consumers should give diesels serious consideration due to their 35% better fuel economy, better high-speed acceleration (i.e., high-end torque), better durability and lower maintenance costs.
Other governments appear to incentivize diesel use through pump taxes. For instance, in Europe diesel taxes are $1.25 per gallon less then gas, and in the U.S. the two are taxed at roughly the same rate.
However, European domestic auto makers have grown up in such an environment. The U.S. Big Three are disincentivized to lobby for such in the U.S. So, a change in U.S. fuel-tax strategy is unlikely.
However, this does not appear to be stopping new diesel vehicles from coming to the U.S. (particularly from Germany). Consumers may end up calling for change.
-- Ronald A. Tadross, CFA
-- Joseph Spak |
