Diesel gets unexpected boost at Detroit auto show

By John Crawley

DETROIT (Reuters) - A fresh mandate from Washington for automakers to sharply increase fuel efficiency has given an unexpected boost to a historically unpopular alternative in the United States -- diesel.

The fanfare at the North American International Auto Show includes gasoline-electric "hybrids" to futuristic technologies like fuel cells, all geared to fight soaring pump prices and conquer what President George W. Bush has termed America's "addiction" to oil.

But diesel was also making a new pitch as a here-and-now option to make engines run more economically and pollute less.

Diesel, a conventional combustion approach long favored by Europeans, has been perennially stalled in the United States because of unacceptably high tailpipe emissions.

An oil-based product, diesel is widely available in Europe where gasoline is more expensive. But only a fraction of consumer vehicles outside of some luxury models, pickups and big trucks, use it on American roads.

"American consumers still have a negative impression of diesel," Takeo Fukui, chief executive of Honda Motor Co ((7267.T)), told reporters at the show on Sunday.

But Fukui also said Honda's new line of "clean diesel" cars due to roll out in the U.S. in 2009 would make money from day one. The new system will clear the same emissions regulations as gasoline in the United States, Fukui said.

Advanced technology has spawned a cleaner burning diesel fuel and Honda and other foreign automakers are using the Detroit show to broaden its appeal for the U.S. market.

The backdrop of a new U.S. law requiring a 40 percent jump in fuel efficiency by 2020 and tougher diesel emissions regulations coming on line at the end of the decade are driving executives to rethink and improve diesel technology.

Cleaner diesel filters out more pollutants and for the first time meets smog pollution laws in all states, according to the Union of Concerned Scientists. Clean diesel also delivers power and gets better mileage than gasoline. But the technology costs more to produce than gasoline engines.

"It is a major step forward in fuel saving and we are going across the board to promote technology," said Dieter Zetsche, chief executive of Daimler AG and Mercedes.

"Modern diesel engines provide tremendous torque and a very smooth run and a boost of 20 to 30 percent in fuel efficiency. Those are very strong arguments for this technology," he said.

Thomas Weber, the head of research and product development at Mercedes and Daimler, said: "Diesel has become accepted."

Automakers are expanding their diesel products globally.

"There is a trend toward diesel in emerging markets," said Phil Popham, managing director of Britain's Land Rover, a unit of Ford Motor Co (F.N).