DaimlerChrysler to Re-Introduce Diesels in Japan

14 October 2005

The Nihon Keizai Shimbun reports that DaimlerChrysler plans to resume selling diesel-powered passenger vehicles in Japan as early as fall 2006. The automaker discontinued sales of its diesel models in Japan in 2002.

Diesel passenger cars are scarce in Japan, accounting for only 0.1% of all cars sold in fiscal 2002, as an example. Currently, there is only one domestic diesel passenger car model, which is manufactured by Toyota.

DaimlerChrysler plans to sell the vehicles—expected to be diesel versions of the Mercedes Benz C- and E-class luxury sedans—in Japan through its local unit after selecting the models and receiving Transport Ministry approval.

The Japanese unit of Volkswagen, the largest supplier of imported cars in Japan, reportedly is also considering marketing diesel vehicles in Japan. It will first weigh factors such as Japan’s vehicle emission regulations and market growth potential.

Japan’s current emissions standards for diesel passenger cars are more stringent than Euro 4. They will be less stringent than the Euro 5 standards due in 2008.

As global emissions standards begin to converge and harmonize, automakers will face fewer local barriers to bringing in a technology such as diesel. In other words, if it meets the European standards, it will also meet the Japanese and US standards.

We’re still some way—perhaps ten years—from that, but in the meantime, the ability of the emerging generation of diesels to meet current tight emissions standards is opening up, or reopening, markets to the technology.

Although pricing hasn’t yet been determined, the premium for a diesel sedan may match the premium for a hybrid sedan in the Japanese market. That would open up an interesting competitive situation, as Toyota is busy launching hybrid versions of its Lexus luxury sedan in Japan as well.