Diesel set to take strong roots in Japan

by 03 Oct 2006

DaimlerChrysler drove back into Japan's almost non-existent diesel car market with a new Mercedes-Benz luxury model and urged rivals to follow suit in an attempt to expand the segment. In the country's first new diesel car launch in four years, the world's No. 5 auto maker stressed the fuel efficiency and eco-friendliness of diesel-powered cars, trying to counter widespread perceptions of diesels as dirty and loud.

In 1990, diesel powered 6.4 percent of all new cars sold in Japan. But demand fell after a law in 1992 lowered limits on emissions of smog-forming nitrogen oxide — a major by-product when burning diesel fuel — and tax changes effectively narrowed the cost advantage of diesel fuel and made diesel cars more expensive. Diesel-powered cars now make up half the European market but their popularity has long since waned in Japan, where just a single model, the Toyota Landcruiser SUV, remains on sale. Daimler itself pulled out of Japan's diesel car market at the end of 2002.

But the trend may shift, said research firm Yano Research Institute, citing growing attention to diesel cars globally and the likelihood that Japan will create incentives to meet its carbon dioxide reduction goals, as diesel cars emit less CO2 than petrol cars. Yano has predicted a climb in diesel cars' share to 11 percent of Japan's passenger car market in 2015 from just 0.2 percent last year.

Diesel fuel is now widely available in Japan, and its quality has improved as oil companies have reduced sulphur levels. But to achieve market growth, DaimlerChrysler said it would need help from other auto makers. Japanese auto makers, including Toyota and Honda, offer diesel cars in Europe, but they have been loathe to launch them in Japan. However, Mitsubishi and Honda have stated they would launch diesel-powered vehicles in three years' time.

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