Germans, luxury marques lead diesel's U.S. comeback

It's easy to blame the economy or the consequent poor car market for the delay of diesels from Chrysler, Ford, General Motors, Honda, Nissan and Toyota, but that hasn't kept the Germans at BMW, Audi, Mercedes-Benz and Volkswagen from turning up the wick on oil-burners. In fact, it's quite the opposite.

The Germans owe their leading position in U.S. diesels to their premium positioning and European provenance - it's easier to absorb the extra cost of a diesel vehicle when you can charge more for it and share the cost with volume production elsewhere.

The Japanese and American carmakers don't have those luxuries, producing primarily mainstream vehicles and without substantial European diesel programs for the most part.

But that doesn't mean the Germans won't be taking advantage of their position. Diesel fuel is more energy-rich than gasoline, and it recently dropped in price to be more affordable as well. Combined with modern emissions technology and low-sulfur diesel fuel, the solution is about as green as the average hybrid.

And diesels do all of that for a cost of about $3,000-$8,000 per car, according to Automotive News. That's a substantial savings over the cost of many hybrid systems. Diesel engines also remain torquey and eminently drivable under a wide range of real-world conditions. On the other hand, hybrid versions carry more popular recognition and more 'street cred' as green machines.

So as the cost-benefit analysis keeps the Americans and Japanese from returning to the U.S. market with their diesel engines, the Germans, particularly the luxury-segment marques, will be forging ahead, building their reach with little if any direct competition.

One potential thorn in the diesel luxury car's side could be Lexus and its line of hybrids, including the first-ever dedicated hybrid luxury sedan, the 2010 HS 250h. Given that car's expected entry-level luxury positioning and performance, however, it's unlikely to challenge the BMW 335d.

The SUV market is equally devoid of significant competition, with Lexus offering only the RX hybrid to do battle with the larger and more luxurious ML-Class and GL-Class BlueTec diesels and the Audi Q7.