Americans will ignite a love-affair with diesel-powered cars in 2007 that will eventually reach European dimensions, while hybrids will remain a niche option, revealed as more of a feel-good publicity stunt than a serious method of powering cars efficiently, economically and at one with the environment.

That is the bet European automobile manufacturers are making as they talk the talk of gas-electric hybrid engines to show they care for the environment, but walk the walk down the diesel trail.

There are some formidable obstacles to be overcome first. Diesel market share in the U.S. was about 3.6 percent in 2006, according to industry researcher J.D. Power, while hybrids took 1.6 percent of sales. This compares with close to a 50 percent diesel share in Western Europe this year; almost every other car sold here was a so-called oil-burner.

J.D. Power analyst Kevin Riddell reckons that diesels will more than double sales to take close to 8 percent of the market in 2012, with hybrids at just over half that. Germany's Volkswagen believes that diesels will capture 15 percent by 2015.

But why should Americans suddenly switch affections and share Europeans' lust for diesel power? Many will remember the hopeless diesels in the 1970s which briefly appeared after oil supply problems raised gas prices shockingly high. The word associations with diesel for those with long memories are often unreliable, noisy, dirty, black-smoke emitting, gutless.

Experts like Peter Schmidt, Editor of pan-European fortnightly newsletter Automotive Industry Data (AID), say that modern diesels are so good, when Americans find out about them, they won't be able to resist.

Economic, silky-smooth

"When word gets around about the diesel's fuel economy, the additional torque, the longevity, the silky-smoothness, we could see the momentum and explosive growth we have seen in Europe. There could be even more rapid growth than (VW) forecasts after 2015. By 2020, 2025, diesels could be as significant in the U.S. as they are in Europe now," Schmidt said.

Professor Garel Rhys of Cardiff University Centre for Automotive Research agrees about diesel's qualities, taking a pot-shot at hybrids too.

"Modern diesels in Europe are fantastic, very sophisticated, and operate just as well as petrol. The technology is quite straightforward compared with hybrids which are much more complex and expensive. If the American consumer allows the scales to fall from their eyes, diesels could grow much faster than the J.D. Power projections suggest," said Rhys.

Low-sulfur diesel

One of the reasons diesel sales have been weak in the U.S. has been the upcoming tough regulatory regime. The fact that U.S. diesel fuel was high in sulfur compared with European diesel meant that attempts to meet the tough rules, mainly concerning dangerous oxides of nitrogen (NOX), were impossible to match economically.

The introduction of low-sulfur diesel this fall has been the catalyst for the diesel revolution and is the basis for new technology which cleans up the engine's emissions. DaimlerChrysler's Mercedes Benz has joined with Volkswagen and its Audi subsidiary to promote clean diesel with the "Bluetec" system, which uses exhaust gas traps, filters and urea injection. Urea injection systems spray an ammonia-like acid into the exhaust, sharply cutting emissions of NOX.

Mercedes kicked off the Bluetec campaign this year, offering its E-class sedan with a 2.7 litre Bluetec engine, coinciding with the introduction of low-sulfur diesel. Next year Chrysler will put the engine in a Jeep Grand Cherokee. Mercedes R, M and GL-class vehicles eventually will use Bluetec. VW's new Tiguan compact SUV will offer the engine when it goes on sale late next year. Audi's massive Q7 SUV will be Bluetec-equipped too. BMW is also expected to join the group next year.

Honda is a player too, and has developed a clean diesel which it says can meet the latest regulations, but without Bluetec's Urea add-on.

This will take time

Changing American habits will take time though, according to Paul Newton, automotive analyst at Global Insight. He says the future U.S. regulatory regime is uncertain and is causing domestic manufacturers like GM and Ford to hold back on diesel investments. The Europeans are being more aggressive because they already have much of the expertise. GM and Ford, in extremis, could use diesel engines developed by their European subsidiaries if demand jumps quickly.

"Overcoming U.S. consumer perception of diesel technology will be a long process and one with an uncertain future, due to possible future emission regulations. Diesel engines typically achieve 30 percent better fuel efficiency over gasoline equivalents and feature powerful torque characteristics useful in low-rev acceleration and towing. The German alliance will target the U.S. consumer's heightened awareness of fuel economy following record high fuel prices and aim to compete with the popularity of petrol-electric hybrid technology, championed by the Japanese brands," said the London-based Newton.

Climate change worries

Worries about CO2 emissions and climate change are also likely to make Americans think long and hard about the need for more fuel economy. Toyota has led the way with gas-electric hybrids, and forced others to follow. GM, BMW and DaimlerChrysler have formed an alliance to produce hybrids. VW, its Audi subsidiary and its new majority shareholder Porsche are doing this too. Nissan announced early in December that it will introduce its own hybrid by 2010.

AID's Schmidt says this is a blind alley because however impressive the technology may be, the solution is too expensive and the results not great, particularly when compared with the efficiency of clean diesel. Other manufacturers have jumped on the hybrid bandwagon mainly because they fear being labelled by the media as unconcerned about the environment.

"There seems to be a consensus that there is no business case for petrol hybrids, but because of the media which has hyped up the hybrid issue, no manufacturer can ignore them. They are all saying, yeah, we're working on them, producing a prototype, but diesel is a financially superior route. Medium to long term, hybrids are not a business to be in because you can't make any money, so nobody is going to back it (hybrids) fully," said Schmidt.

Cardiff University's Rhys says manufacturers are also seeking insurance, as well as being concerned about public relations.

Blind-side

"Manufacturers are worried that legislation might be introduced to give hybrids a financial advantage, so they're concerned not to be blind-sided by that, and they're trying to show that they are aware of the (climate change) issues. Hybrids are not really suited to American long distance driving habits. They only really come into their own in some urban driving. If Americans could see what diesels could really do, all this bluster about hybrids being the savior would be overtaken," said Rhys.

There are other obstacles to be overcome for diesel power to become ubiquitous. Oil companies must be convinced that it's worthwhile improving the infrastructure so that diesel buyers can line up with their fellow car colleagues at gas stations and not with the truckers. European manufacturers are busily lobbying the oil companies now, seeking to persuade them that the diesel market is about to catch fire.

Winner at Le Mans, Sebring

And the message has to be explained to the American public. One way will be to trumpet the sporting achievement of diesel power. Last June an Audi R10 with a 5.5 litre V-12 650 bhp diesel won the prestigious Le Mans 24 hour race. Last March the same car won the Sebring 12-hour race.

At the moment, the Europeans are not planning a massive, expensive advertising campaign. They are hoping that a low-key approach through enthusiast magazines, the Internet and word of mouth will do the trick. After all, this is a long-term plan. Any advertising is likely to talk about Bluetec rather than use the dreaded "D'" word.

Meanwhile, hybrid sales are slipping. U.S. sales of the Toyota Prius and the Japanese company's other hybrids sagged in the fall as federal tax breaks ran out.

A year from now, more evidence will be available to show if the diesel revolution has taken root.

John Lawson, automotive analyst at Citigroup in London, believes that diesels will be a limited success, but he doubts they will match the European experience. The dollar's weakness will hinder European plans too. Even BMWs and Mercedes made in the U.S. use engines imported from Europe, which become more expensive as the dollar weakens against the euro.

Will it succeed this time?

"No one is completely convinced that this (Bluetec/Urea) is the answer," said Lawson. "But the hope is that Americans will adopt diesel this time around. The new-generation diesels using the new low-sulfur diesel fuel will become a significant niche in the U.S., but whether it becomes more than that is difficult to say, and frankly, unlikely. I'd be surprised if it became a mass market product."