Friday, April 06, 2007

Hyundai Looking at Diesel Lineup

Hyundai looking at diesel lineup

Engines would be hybrid alternative

NEW YORK -- Hyundai may offer diesel engines across its U.S. lineup of cars and trucks as an alternative to gasoline-electric hybrids if it can clear cost and technical hurdles, the automaker said Thursday.

Steve Wilhite, chief operating officer of Hyundai Motor America, said while Hyundai was developing its own hybrid technology, diesels made better financial sense for its customers.

"The highest priority on my personal wish list is bringing our diesel technology to the United States, and I'd like to bring that across all of our products," Wilhite said in an interview at the New York auto show. "It just seems like a much more elegant solution to me than a hybrid."

Every major automaker has been working on new diesel models for the United States as the federal government has finalized strict new emissions rules and lawmakers consider tougher fuel economy standards.

Honda Motor Co. has said it will offer a new diesel engine in 2009, and German automakers have been promising several diesel variants.

Wilhite did not say when he hoped production of Hyundai diesels might start.

Wilhite, who had been global marketing manager for Nissan before taking the Hyundai post in August, said if a diesel option costs about $1,000, it would pay for itself in fuel savings. Diesels and hybrids can post 40% better fuel economy than gasoline engines in some vehicles, but hybrids cost $2,000 to $3,000 more than standard models.

"Fundamentally, you don't get a payback on a hybrid," Wilhite said. "In a diesel, you more than cover the premium."

Wilhite also said that while Toyota Motor Co. has been successful with its Prius hybrid, part of that success has come from government tax incentives and state rules, especially in California, that allow hybrids in carpool lanes.

California ended that benefit last year, and USA Today recently reported that Priuses with permits for carpool lanes were worth $4,000 more on the used car market. Toyota has offered incentives on the Prius this year, and boosted the offers to up to $2,000 on Wednesday.

Hyundai already sells diesel models in Europe and Asia, but Wilhite said the company was still working on ways to meet the strict new U.S. standards.

Wilhite said Hyundai was targeting sales of about 500,000 vehicles in the United States this year, after recording flat sales of 455,000 in 2006. A run-up in the value of the Korean won currency forced Hyundai to raise its prices, which Wilhite said helped transaction prices but stunted sales.

While the company has expanded its lineup steadily and will add a near-luxury, rear-wheel-drive sedan in a couple of years based on the Genesis concept shown at the auto show, Wilhite said he had no desire to jump into the pickup market as Toyota, Honda and Nissan have done.

April 6, 2007

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