Thursday, November 27, 2008

Hyundai diesel is coming

This is big news, and I am plenty excited.

For too long, Volkswagen has been allowed to play, virtually alone in the North American market, as pretty much the only diesel offering in a car under $25,000. With this near monopoly, they have been able to settle into a smug complacency as the only game in town. If you asked the average TDI owner (say, a member of the TDIClub), the majority would probably say they'd never own a gas VW, and only have a VW because they are diesel people.

Sure, I could get a Mercedes-Benz E-Class, but that ain't chump change. Hmm, I should rephrase that - Sure, the E-Class is available, but it ain't chump change, and I'm a chump.

There have been murmerings that Honda might finally step up and offer diesel. Honda quality with diesel performance would be absolutely delicious. The retirement of the Accord Hybrid (Consumer Report's "Best Family Car") suggests that Honda was retreating to regroup and return to the fuel efficiency segmentation.

Lexus is contemplating taking the entire brand hybrid. Some manufacturers aren't sold on diesel, and are experimenting with hydrogen (BMW), and other electric variations. Clearly, the consumer demand for progress in fuel efficiency is not going to go away. But diesel is ready to rock right out of the box, with plenty of infrastructure in place, and a tremendous environmental upside from its "green roots" on the biodiesel front.

So, to hear that Hyundai has been quietly putting its ducks in a row and is preparing to come to market with an affordable diesel offering is great news for consumers. It's going to put pressure on other manufacturers to avoid the temptation to make all diesel offerings overly expensive. Regular people want a chance to try diesel, too. They're going to get that chance with Hyundai.

Now, truth be told, Hyundai isn't Toyota or Honda...yet. But, they're coming. They've been aggressive with their design, marketing, and are backing it up with solid engineering that's being recognized with continuously increasing quality reviews and ratings. Simply put, they are building decent vehicles and pricing them where more people can afford them.

That formula sounds familiar - the big three Japanese companies (Toyota, Honda, Nissan) did the same thing in the 80s in their full on assault on the market share, and the results are in - they were successful. When I was a kid, Honda was a lawn mower. The audacity to launch the first Japanese luxury brand (Acura, 1987) could only be supported by a serious committment to quality - anything less would have been met by a backlash. 20 years later, Lexus, Acura and Infiniti have their loyal followings and also set the bar in not a few areas of quality, fit and finish, residual values, etc...

In other words, it's been done, and smart players can now emulate the formula. Hyundai is apparently taking a page from the Japanese leaders and applying it to their mix. Good for them. Good for us.

Perhaps with this new competition, VW will have something to lose and raise the bar with their general quality, fit and finish. Perhaps other manufacturers will recognize that the sub-$25,000 segment needs diesel offerings and is a good segment in which to be competitive. Here's to hoping.

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