Mercedes tests market for diesels in Japan.
James B. Treece - Automotive News - Sept. 13, 2006
Japan receives the new E320 CDI - EPA rated 27/37 here in the states.
TOKYO - DaimlerChrysler Japan Ltd. executives had to convince headquarters in Germany that they could sell diesel engines in Japan. If they succeed, it may convince other European carmakers to follow in its footsteps.
DaimlerChrysler Japan on Aug. 25 unveiled a diesel-powered E320 CDI Avantgarde as part of a reskinned E-class lineup in Japan. It last sold a diesel-powered car in Japan in 2002.
Hans Tempel, CEO of DaimlerChrysler Japan, won't give sales forecasts for the diesel-powered E320, saying only: "The numbers are attractive enough for us to go into this endeavor."
In 2005, DaimlerChrysler sold 46,161 Mercedes-Benz vehicles in Japan. The E class represents about 20 percent of Mercedes-Benz sales in Japan.
The diesel-powered E320 will be offered as a sedan or station wagon, making it two of 16 E-class variations offered in Japan.
The high sulfur content of diesel fuel sold in Japan used to be a barrier to the sale of modern diesel engines. That has changed dramatically.
In January 2005, the sulfur content of Japan's diesel fuel dropped to 10 parts per million, from 50 ppm, two years ahead of schedule. Today Japan has the lowest sulfur content of any market in the world. Some nations in Europe still sell diesel with a sulfur content of 50 ppm.
In early 2005, DaimlerChrysler Japan began discussions with headquarters in Germany about selling a diesel-powered car in Japan. "For years we had been telling Stuttgart that there was no market" for diesels in Japan, Tempel says. "So convincing our own organization in Japan and convincing Stuttgart was the first step."
Now it must convince Japanese consumers. Over the past year the company has held seminars on engine technology to raise awareness of how diesels have changed.
DaimlerChrysler Japan does not plan a major advertising blitz, however. Instead it will have its dealers offer test drives to potential customers, starting with a loyal base of owners of aging diesel Mercedes.
When introducing a new model, DaimlerChrysler Japan often trains the sales manager about the car's features. He then trains his staffers.
Not this time. "Each salesman was trained individually on diesel engines," says Kai-Uwe Seidenfuss, DaimlerChrysler Japan's vice president for sales and marketing in the Mercedes Car Group.
The carmaker chose the E class as the first car to offer a modern diesel in Japan to show that diesels are suitable for mainstream luxury cars. Offering it on an SUV "would create a new image for diesels, as a powertrain for a specialty car or niche market," Tempel says.
Other European carmakers remain cautious about trying to market diesels in Japan. Only Volkswagen AG has said it will offer a diesel-powered vehicle, the Touareg SUV.
"I think they're all waiting to see how Mercedes-Benz does," Tempel says. "It's the same with Chrysler. If this whole thing is going to fly, then let's try Chrysler."
Diesels once made up about 6 percent of Japan's passenger-vehicle market, mainly SUVs. But after Tokyo Gov. Shintaro Ishihara began attacking diesels as dirty and a hazard to public health, carmakers dropped diesels from their lineups. Today only one Toyota SUV is offered with a diesel engine in Japan.
So far, only Honda Motor Co. among the Japanese carmakers has said it will sell a diesel-powered car in Japan.
One concern is transmissions. Japanese carmakers have a shortage of transmissions that work well with diesels, which produce different levels of torque at different revolutions per minute than do gasoline engines.