The future market of diesel powertrain for passenger cars, european and global

Michel Costes
Jamel Taganza
Jean-Michel Prillieux
Jean-Bruno Monteil
info@inovev.com
http://www.inovev.com
Last update: 20/5/2014 13:00
THE FUTURE MARKET OF DIESEL
POWERTRAIN FOR PASSENGER CARS,
EUROPEAN AND GLOBAL

INTRODUCTION
Diesel engines for passenger cars has developed quickly for the last two decades
to reach in 2013 more than half of the market in Europe and India,
and one third of Korean market.
However it is not developed in other main automotive regions of the world
(such as North America, Japan and China).
And it is now strongly challenged, in particular in Europe, by new technologies, and it
must adapt itself to new regulations and standards.
The objective of this presentation is to shed light on:
the future of diesel engines in the world with a focus on Europe.
We will scrutinize the state of the art, analyse key factors of changes and build
scenarios for future.
Within this frame, following issues will in particular be addressed:
• Why diesel is used for passenger cars in Europe and not outside Europe?
• Will diesel motorisation decline in Europe or maintain its position?
• Do exist significant development opportunities outside Europe?
2May 21 and 22, 2014

Presentation map
Introduction
Methodology
Definitions and classifications
State of the art: European and Global
 Automotive market by itself :
• World
• Europe
 Diesel powertrain market: world and Europe
• World
• Europe
Future
 World
 Europe
Conclusion
Key factors of change
 World
 Europe
33May 21 and 22, 2014

Methodology
Collecting
Raw Data
Source: Car Industry and
Countries Governments
Type of data:
-Economical (production
and registrations)
-Technical (innovations,
processes, materials…)
1 Treatment
Technical data:
- Post of information and
analyses by automotive
players on the Inovev Internet
platform.
- Disassembly of cars.
Economical data:
- Putting into Inovev’s
standards
- Estimation of production
figures from sales data
2
Output3Analyses
- Market information
and analyses
- Technical information
and analyses
Experts:
- Inovev analysts
- Inovev’s worldwide
network
4
Full and
coherent
databases
Technical
information
related to
customers’
interest
44May 21 and 22, 2014
MARKET
AND
TECHNICAL
DATA

Definitions and classifications
Motorisations
 100 % thermal engine
• Spark ignition engine
(gasoline, LPG, alcohol, other fuels)
• Compression ignition engine (diesel)
 Hybrid engine
• HEV gasoline (non plug-in vehicles)
• PHEV gasoline (plug-in vehicles)
• Hybrid diesel
 100 % electric engine
• BEV (battery engines)
• Fuel cell
Diesel powertrains
=diesel engines=compression ignition engines
Passenger Cars (PC) and Utility Vehicles (UV)
European classification.
“Passenger Cars” do not include European Light Utility
Vehicles (LUV) but include some vehicles classified
as “Light Trucks” in NAFTA (like MPVs and SUVs)
Market segments)
 Segment 1:
European classification: A, B, C, D, E,F
 Segment 2 (in combination with segment 1):
Bodies (sedans, SUV, crossovers,
SW/estates, coupes…
Production quantities
 Vehicles assembled in a given plant;
 CKD s and SKDs are counted where they are
assembled (and not produced).
Variable geometry Europe: Europe 28, Europe 28 + Turkey, Europe 28 + Turkey + Russia
5May 21 and 22, 2014

I. State of the art: European and Global
Automotive Market by itself
World
Europe
Diesel Powertrain market
World
Europe
6May 21 and 22, 2014

Automotive World Market: by location of registrations (all motorisations)
7May 21 and 22, 2014
PC registrations in Asia (2005-2013) by countriesWorld PC registrations (2005-2013) by regions
World PC registrations
(2005-2013)
Total
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Eight countries control most of the worldwide production:
Japan, USA, Germany, France, South Korea, China, Italy, India.
Automotive World Market: by control country (all motorisations)
8May 21 and 22, 2014
Number of passenger cars by control regions
Inovev definition of a control country:
Country where final decisions are taken and generally major Design/Engineering centres are located.
For instance UK, Spain, Thailand are major production countries but small control countries;
This definition may be argued but has the advantage to give a complementary view of the picture of the
world automotive industry.
Number of passenger cars by control countries
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World
Europe
World
Europe
9May 21 and 22, 2014

Decline in sales and production
Structural factors combined to a depressed European economy explain this decrease:
 Car is less and less a social status object.
 New mobility ways have developed and will continue to develop:
better and better public transportation, car sharing and pooling, 2-wheelers …
However the decline in production has been softened by the increase of German
exports, in particular to Asia.
Automotive European Market (all motorisations)
10May 21 and 22, 2014
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World
Europe
World
Europe
11May 21 and 22, 2014

World diesel powertrain market: registrations 2013
Use of diesel powertrain is restrained to some regions of the world
BREAKDOWN OF FUEL REGISTRATIONS 2013
12May 21 and 22, 2014
Diesel:
13% of the PC in the world.
53% of PC in Europe.
Europe: 72% of diesel PC in the world.
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World
Europe
World
Europe
13May 21 and 22, 2014

Registrations of compression engine PC in European Union from 1994 to 2013)
Diesel market share in the different European countries from 1994 to 2013.
 Diesel car registrations in the European Union 27 countries (in volume):
 In 2011: 7.6 million of passenger cars (56 %)
 In 2013: 6.5 million of passenger cars (53 %).
 Market share of diesel cars in European Union (27 countries) and in some countries:
- Germany - France - United Kingdom - Spain - Italy
Registrations: Total European Union 27
14
Registrations: European Union 27by countries
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Current diesel powertrain market in Europe
• While the hierarchy of proportion of diesel engines is: D, C, B, E, F, A
the order in terms of volume is: C, B, D, E, F, A
European diesel powertrain market
15May 21 and 22, 2014
Production of diesel cars by segments - % Production of diesel cars by segments - Numbers

Current diesel powertrain market in Europe
16May 21 and 22, 2014
Gasoline Diesel/Gasoline
Fierce competition
from capacities of 1400 CC
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II. Key Factors of Change
World
Europe
17May 21 and 22, 2014

Future of diesel Powertrain: World (all motorisations)
World automotive market: forecast
 The global car market will continue to grow in the next years.
 Growth will continue to be drawn by China, but other countries will contribute more and more to
the rise, in particular “new emerging countries”.
18May 21 and 22, 2014
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Key Factors of Change : World
The main question which arises is: may some non-diesel countries come to diesel?
Actually diesel will remain in the future a less consuming powertrain than a gasoline engine,
even if the difference of consumption with gasoline powertrains will continue to decrease.
The main drawback of the diesel engine remains its higher level of emissions of Nox and particulates.
But these levels have decreased significantly.
The choice will depend on the energy policy of the different countries
Pollutant emissions
Decrease of consumption
and saving of CO2
19May 21 and 22, 2014

II. Key Factors of Change
World
Europe
20May 21 and 22, 2014

Why has diesel engine developed in Europe?
 The specific positioning of Europe is the result of strategies and policies having been
implemented and pursued over decades.
 Two main motivations have fostered these strategies and policies: the needs to:
• Decrease energy consumption.
• Value the heavy cuts of the oil.
 These needs pushed:
• Some European States to favour the diesel motorisation in terms of taxes.
• European Union to differentiate emission norms between gasoline and diesel
engines.
• Carmakers to develop more and more sophisticated technologies for diesel
powertrains.
 As the needs of European States were different, no common strategy/policy was
developed in the European Union.
Results were a contrasted development of diesel powertrain in Europe.
21May 21 and 22, 2014

Key Factors of Change : Europe
Different factors may change the market in the next years:
 Car market by itself (all motorisations included)
 Tax policies of the European States.
 European norms.
 Technological progress of technologies
• diesel technologies
• technologies of competing motorisations: gasoline and electric/hybrid powertrains.
 Carmakers strategies.
22May 21 and 22, 2014

Car market by itself (all motorisations)
23May 21 and 22, 2014
PC registrations in Europe (27 countries) – 2000-2018 PC production in Europe (27 countries) – 2000-2019
access
access

Tax policies of the European States
• Diesel fuel is more expensive to produce than gasoline fuel.
• In order to favour diesel fuel for automobiles, European States have set taxes, with the result
in most European countries of a diesel fuel less expensive for the consumer than the gasoline
fuel.
• On one side, European States can be tempted to decrease the advantage for diesel fuel:
- Some reasons that had lead European States to set taxes favourable to diesel fuel are not
valid any more.
In particular, the situation relating to imports and exports of gasoline and diesel has
changed. The tax incentive was decided at a time when it was necessary to use more
diesel in Europe for economic reasons. Due to the rise of diesel engine vehicles,
Europe must now import diesel. In France for instance, the deficit of trade balance due
to diesel fuel imports account for 13 billion Euros per year, i.e. 20% of the total deficit
of the country.
- In some countries European Union, various organisations and lobbies highlight with a
strong voice the nuisances of diesel in terms of pollution.
24May 21 and 22, 2014

- The tax advantage is not the main factor
prompting the consumer to choose
a diesel motorisation.
- The new diesel engine vehicles responding to the
new norms remain soberer as gasoline engine
vehicles, and are cleaner and cleaner.
25May 21 and 22, 2014
Putting taxes on new vehicles is not very productive in terms of pollution decrease.
-It is now difficult for governments to reduce rapidly the tax differential.
Diesel engine vehicle owners might have a loss of confidence into a government which incites them to buy
engine diesel vehicles and change the rules afterwards.
Besides, decreasing the differential means either decreasing the taxes of gasoline fuel (which means a
financial loss for the state), or increasing the taxes on diesel fuel (which might be unpopular).
-The best way to reduce pollution and consumption is to replace old vehicles by new vehicles.
Tax policies of the European States
• On the other side, there are many
brakes to decrease the tax advantage:
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Anti-pollution standards are more stringent for
diesel engines from Euro V.
 Particulate filters have been and are
widely used in order to comply with Euro V.
Some improvements are in progress in order
to filter smaller and more toxic particles.
 Selective NOx reduction catalysts should
be used in order to pass Euro VI standards in
September 2015 (SCR systems with added
urea or catalyst).
Convergence of standards
between diesel and gasoline over time:
Euro 3 (2001), Euro 4 (2006), Euro 5 (2011), Euro 6 (2015)
Emissions in mg/km - Passenger cars
26May 21 and 22, 2014
European norms

Innovations in technologies for competitive engines
Competition between diesel engines and alternative motorisations have increased very much over the last 5 years: competition
with gasoline engines, but also electric-equipped vehicles.
 Thermal engines
• For same power output:
• traditional gasoline engines produce more CO2 compared to diesel engines:
15 to 20% according to carmakers data.
• gasoline direct injection engines, the gap is weaker: 0 to 15 % according to carmakers data. VW Group is the
leader in the development of these engines, which are used in Golf, Passat, A1, A3 and A4.
• Gasoline engines become smaller and smaller for the same output (downsizing)
27May 21 and 22, 2014
Average capacities
weighted by
the number of vehicles
(production in Europe)
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Innovations in technologies for competitive engines
Competition between diesel engines and alternative motorisations have increased very much over the last 5 years: competition
with gasoline engines, but also electric-equipped vehicles.
 Electricity-equipped engine vehicles
• Hybrid gasoline vehicles are in direct competition with diesel engines.
They have made a breakthrough in Japan and USA. But the quantities remain modest: 1.7 million vehicles (HEV +
PHEV) in 2013 into 72 million passenger cars.
Hybrid diesel vehicles are expensive and will be restrained to a niche market (30 000 vehicles in 2013).
• Battery electric vehicles will develop in the dense areas.
Around 150 000 vehicles have been produced and sold in the world in 2013.
The rise will be slow at the beginning but accelerate strongly afterwards.
28May 21 and 22, 2014

III. Future: European and Global
World
Europe
29May 21 and 22, 2014

Future of diesel Powertrain: World
World automotive market: main countries
 USA
• USA have always been reluctant to use diesel engines for passenger cars.
As neither the energy saving nor the CO2 emissions have ever been a chief
concern, they privileged the reduction of Nox and particulates against reduction of
consumption and CO2.
Consequently they had not invested in technologies relating to design efficient
engines nor market appropriate diesel fuel.
• But situation may change.
USA have developed now a better diesel fuel.
And they can feel more concerned by energy saving and CO2 emissions under
international pressure.
• It is to be added that diesel engine vehicles are very well adapted for many
regions of the USA which have a low density of population and in which pollutants
are diluted (with clean diesel of Euro 6, it means the combination of small emission
per car with low number of vehicles per square km).
30May 21 and 22, 2014

Future of diesel Powertrain: World
World automotive market: main countries
Japan
• The situation in Japan is quite different from the USA’s, as most regions are very densely
populated.
Hybrid and electric vehicles seem more adapted to this country.
However electricity must be produced in a country which has some willing to withdraw from
nuclear energy.
• Next-Generation Vehicle plan displays government targets for diesel engine vehicles:
• in 2020: 5%
• and in 2030: 5-10 %.
China
• China has many densely populated areas, but also less populated regions.
China has to face severe pollution issues in big cities.
The best way from an environmental point of view would be electric and hybrid vehicles. But
these vehicles remain expensive and need investments for charging stations.
• Clean diesel engines would therefore be an excellent compromise for many regions of
China.
31May 21 and 22, 2014

III. Future: European and Global
World
Europe
32May 21 and 22, 2014

As the overall passenger cars production will increase in Europe,
diesel engines production may also increase even if its market share will decrease.
Diesel production share will decrease slowly from now to 2020.
However the decrease of diesel share might be stronger in case that European states
decide new scrapping bonuses (which will favour the purchase of small gasoline
engines) or measures in favour of electric-equipped vehicles.
Future of diesel Powertrain: Europe
33May 21 and 22, 2014

Conclusion
34May 21 and 22, 2014

Conclusion
Diesel powertrain is often and regularly attacked by organisations putting on the front
drawbacks of diesel, in particular its higher emission levels of NOx and particulates.
However differences between pollutant emissions of diesel and gasoline powertrains have
narrowed.
On the other side, clean diesel powertrain remains less fuel-consuming than its gasoline
competitor, and then enables both saving resources and protecting our earth (less CO2
emission).
At a time when:
 Many countries develop further the automobile use (in particular BRIC and new emerging
countries) and many countries have to face a steep energy need increase.
 Traditionally developed countries commit themselves to reduce their CO2 emissions and
have to contribute to the earth resources saving.
New clean diesel powertrain remain a good option for many uses.
It will be challenged in Europe by new efficient direct-injection gasoline engines and
electric-equipped vehicles (which will develop in densely populated areas).
The market share (registrations) of diesel will decrease but production in Europe will
decrease much less and might even increase (due to exports to fast growing countries).
On another side big markets become accessible in other regions of the world.
35May 21 and 22, 2014

Postal address:
34 rue Camille Pelletan
92300 Levallois-Perret
France
Phone: + 33-952 96 06 68
Contacts:
 Managing director
Michel Costes
michel.costes@inovev.com
 Sales and marketing
Jamel Taganza
jamel.taganza@inovev.com

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The future market of diesel powertrain for passenger cars, european and global