European buyers shun diesels after VW emissions scandal

European buyers appear to be losing their love of diesels in the wake of the Volkswagen Group emissions scandal.

Sales of diesel cars have accounted for more than 50 percent of the region's new-car market in recent years. EU governments have promoted the powertrain with incentives and low diesel fuel prices to help reduce emissions of CO2, a gas blamed for climate change. Diesels are more fuel efficient than gasoline cars so they emit less CO2.

But diesel's share fell to below 50 percent of the western European market in April as more buyers shifted to gasoline and alternative fuels, according to figures from analysts LMC Automotive. Diesel's share declined by 2.2 percentage points to 50.1 percent in the first four months and by 3.1 percent to 49.7 percent in April, LMC said.

Western Europe's total new-car market including all powertrain types was 4.87 million in the first four months, up 7.7. percent, and 1.21 million, up 8 percent, last month, LMC figures show.

Diesel cars have been hit by negative publicity after VW Group admitted to rigging engine software systems in 11 million of its diesels worldwide including 8.5 million in Europe. VW engineers came up with the cheat to meet strict limits in the U.S. for emissions for health-harming NOx pollutants, but the scandal has since spread globally.

Smaller diesels hit

The sharpest decline in diesel sales was in the subcompact, compact hatchback, and small minivan segments, LMC said.

Sales of large and executive diesel sedans, which account for 80 percent of the volume for such cars in some European markets, had a small decline. "It shows they are not fully immune," LMC said.

Sales of diesel minicars remained flat, although share of diesels in this market segment is already very low.

LMC said it expected there to be "some impact" on diesel sales in Germany after the government agreed to offer incentives for plug-in hybrid vehicles.

Analyst firm IHS Automotive predicts the market share for new diesels sold in Europe will drop to about 35 percent by 2027.

Automakers are stepping up investments in alternative powertrains that are fuel efficient and have low or zero emissions, such as plug-in hybrids and electric cars.

"There will come a day when it’s not profitable any more to invest in diesel technology," BMW CEO Harald Krueger told reporters during the Geneva auto show in March. His new strategy for the luxury automaker hinges in part on a roll out of electric cars.

Daimler said in Geneva it plans to earmark half a billion euros to expand production of electric car batteries.

Meanwhile upcoming tougher pollution controls for diesel cars in Europe will further hit sales, especially of smaller models for which costly after-treatment technology is not economic, analysts say.