GM Suit Digs a Deeper Grave for DieselBy
Litigation is ‘accelerating the demise,’ BI analyst says
Emissions regulations make diesel-cleaning technology pricier
It’s easy to imagine diesel will die in America.
The troubles that started almost two years ago with the emissions scandal at Volkswagen AG just keep rolling on and on.
With General Motors Co. now confronting a class-action lawsuit over 700,000 diesel trucks, there’s growing sense across the auto industry that the days of diesel cars are numbered, at least in the U.S.
GM calls the allegations of emission-test cheating baseless, and the lawsuit stops short of claiming a breach of clean-air regulations. But increasingly, analysts are wondering who will be willing to buy diesel cars and trucks given that many in the industry have been accused of fudging pollution standards. More to the point, how many carmakers will be willing to keep making them?
“This is accelerating the demise,” said Kevin Tynan, an analyst with Bloomberg Intelligence. “We were never into them anyway, and with alternatives like hybrids and electric vehicles, there just isn’t much of a reason to sell them.”
GM is just the latest automaker to face a civil lawsuit claiming that its diesel engines use software to meet clean-air rules while the engines pollute at higher levels. The law firm suing GM, Hagens Berman, has also sued Daimler AG, Fiat Chrysler Automobiles NV and Volkswagen, which must pay $24.5 billion in government penalties and consumer givebacks for cheating on diesel emissions.
Even if the other lawsuits come to naught, tougher regulations and growing litigation make selling the cars onerous. Automakers have mostly been phasing diesel engines out of all but their brawniest pickups, which need the added power for towing and hauling.
This year there are only 10 diesel models for sale in the U.S., half what was offered in 2016. Sales fell to 86,000 last year from 143,000 in 2015, according to data compiled by Bloomberg.
And it’s not just Volkswagen pulling them off the market. Daimler’s Mercedes-Benz isn’t selling four models that were on dealer lots in 2016, and BMW AG has dropped its offering to two from four, selling only its 328 sedan and X5 sport utility vehicle.
GM offers three, not counting the large pickup trucks that are targeted in the latest lawsuit. The Detroit automaker offers diesel engines in its Chevrolet Cruze compact and Chevy Colorado and GMC Canyon midsize pickup trucks.
Hagens Berman also targeted GM last year in a suit over diesel emissions from the Cruze. The judge threw out some of the allegations but said the plaintiffs could continue to sue over whether GM’s cars used a cheat device to meet regulations. GM was able to certify the 2017 model of the Cruze with the Environmental Protection Agency even after the suit was filed.
As for the latest suit, GM denies that the 705,000 diesel pickup trucks in question have any kind of cheat device and maintains that they meet U.S. and California emissions rules. Daimler was sued more than a year ago, and the Justice Department launched an investigation, but no charges have come from it, company spokesman Han Tjan said in a phone interview.
Regardless of the outcome of lawsuits, some diesel cars and SUVs are going away because future clean air rules will make them more expensive to sell, said John German, senior fellow at the International Council on Clean Transportation, which helped discover Volkswagen’s cheat device. The technology required to clean soot and smog-causing oxides of nitrogen will get more expensive as rules get tougher.
That means diesel will probably be relegated only to a hard-working class of vehicles. While hybrid electric cars can save fuel as effectively as a diesel sedan, and Tesla’s electric cars can offer plenty of zip for motoring enthusiasts, no technology gives the towing power needed for big work trucks like diesel.
Sales numbers for diesel trucks aren’t big, but they bring in thousands of dollars in profits. Trucks like the Chevy Silverado 2500 with a diesel start at more than $33,000 and can easily surpass $40,000 in price. It’s easier for carmakers to pass on added costs for cleaner diesel to those buyers, many of whom are commercial customers, German said.
“Diesel will continue to dominate in heavy trucks,” he said. “If customers have to pay more for them, they will.”