Volkswagen AG acknowledged early last week it had duped US regulators when they performed diesel engine emissions tests and the technology is now going to suffer massively in Europe as well as scrutiny across the board impacts the German manufacturer and its rivals.
The technology has been highly popular in Europe but has seen a decline on the continent lately – even though French automakers PSA Peugeot Citroen and Renault, for example, rely on it for more than 60 percent of continental deliveries. The diesel-powered cars have been attacked lately due to pollution concerns – with Volkswagen’s “dieselgate” lending further weight to detractors. Industry consultant LMC Automotive now believes the technology could see a significant market share fall – from 53 percent last year to just 35 percent in 2022. “Europe will go down particularly in the segment for smaller cars,” comments Sascha Gommel, a Frankfurt-based analyst at Commerzbank AG. “You can’t charge your customer for the additional content that needs to go in the car in order to comply with regulation,” when it comes to entry-level models.
Carmakers in Europe already face a tough climb uphill to meet the more stringent rules on fuel consumption and carbon-dioxide emissions and the woes will be intensified by the consumer backlash against diesel technology and the intense regulatory scrutiny they now face. Automakers will not give up on diesel, though – most of the European Union countries tax the fuel less than gasoline and while the upfront cost is higher it also comes with around 30 percent better fuel economy. Compared to about one percent in the US, diesel car registrations made up 53 percent of sales in the EU last year, slightly down from 55 percent back in 2011, according to ACEA.