March 28 (Bloomberg) -- Volkswagen AG’s Audi brand, Bayerische Motoren Werke AG and Daimler AG’s Mercedes-Benz, are expanding diesel lineups in the U.S. as consumers are drawn by the performance and as a way to counter rising gasoline prices.
BMW is introducing diesel versions of its 3 Series and 5 Series this year, Ludwig Willisch, the company’s chief executive officer for North America, said in an interview yesterday at the New York auto show. BMW plans to offer diesel engines in almost all its model lines in the next five years, he said.
Audi, which sells diesel versions of the A3 hatchback, A8 sedan and Q7 sport-utility vehicle, will introduce diesel variants of the 2014-model A6 and A7 sedans and Q5 SUV, Scott Keogh, the automaker’s U.S. chief, said in an interview.
Makers of luxury vehicles, like other automakers, are under U.S. regulatory pressure to double their corporate average fuel economy, known as CAFE, to 54.5 miles (88 kilometers) per gallon by 2025.
“As luxury and non-luxury manufacturers struggle to reach mileage standards, diesel has emerged as one of the preferred technologies,” Alec Gutierrez, senior analyst at Kelley Blue Book, said in an interview. “Especially in luxury cars where customers don’t want to sacrifice performance and hybrids haven’t taken off.”
BMW, based in Munich, is expanding the lineup based on sales of the diesel version of its X5 SUV, currently the only model for which it offers a diesel engine, Willisch said. Every fourth X5 sold in the U.S. is a diesel, and when gasoline prices spike, that can increase to every third, he said.
“It is a very convincing proposition and I don’t know why it shouldn’t work in the U.S.,” Willisch said. “It’s range, fuel economy, torque. That all is superior to a gas engine.”
About half the A3 hatchbacks Audi sells in the U.S. and about 36 percent of the Q7 are diesels while take rates for the sedans should be closer to 15 percent, Keogh said.
“We see that as being very successful and that’s why we’re bringing more of them,” Keogh said. Audi is based in Ingolstadt, Germany, while Volkswagen is based in Wolfsburg.
Mercedes offers a diesel option on its SUVs as well as the E-Class and S-Class sedans. It’s adding a four-cylinder diesel engine this year and plans to eventually add a diesel variant for the C-Class, Steve Cannon, chief executive officer of Mercedes-Benz USA, said in an interview.
“As we move to 2025, diesels help us,” he said. “We are slowly but logically expanding our product lineup in diesels. With this next move, we think we’re there.” Daimler is based in Stuttgart, Germany.
Diesels permit luxury buyers to obtain 25 percent to 30 percent better fuel efficiency while maintaining power and performance, said Rebecca Lindland, an automotive consultant with Rebel Three Media & Consultants in Cos Cob, Connecticut.
“There’s only so much downsizing a luxury buyer is going to tolerate,” Lindland said. “You want me to spend $40,000 on a three-cylinder engine when I can spend $40,000 on a diesel?”
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