Volkswagen remains committed to selling diesel engines in the U.S. while other makers waffle.

While some consumer attitudes toward diesel engines are becoming more favorable, roughly two-thirds of potential buyers still will not consider the expensive engines for their next vehicle. 

According to the Morpace Powertrain Acceptance & Consumer Engagement (PACE) study, 62% of new vehicle owners feel that diesel powered vehicles have “gotten better” over the past 10 years. And 35% now say they will “consider” clean diesel technology for their next vehicle because of perceptions of improved fuel economy and greater environmental friendliness. Small car owners, not surprisingly, show the least interest in oil burners. Owners of gas-guzzling luxury cars and full-size pickups are most likely to consider “clean” diesel.

Diesels have certainly been popular in Europe where lavish subsidies exist for the fuel or in tax reductions for vehicles that use diesel fuel. They now account for about half of all new motor vehicles sold there each year. In this country, diesels account for well under 5% of the market, though the market research firm, J.D. Power and Associates, perhaps influenced by its European-based clients, says the figure could reach 15% – 20% by the middle of the next decade.

Mercedes-Benz plans to introduce a new Bluetec version of its E350, shortly after the launch of the gasoline-powered 2010 E-Class sedans and coupes, later this year. The E350, which will meet the toughest emissions standards in all 50 states, provides V-8 like performance but V-6 fuel economy. The company is also considering an E250 4-cylinder diesel for the U.S. that would provide V-6 levels of horsepower and torque, but fuel economy estimated at 44 mpg. That would meet or exceed the mileage of the best hybrid models in its mid-size segment, but still offer substantially better performance, according to the automaker, which missed the move to hybrids by its Japanese competitors, notably Lexus.

Audi will launch its first “clean” diesel, the Q7 TDI, later this month for $50,900, officials have announced. The Q7 is expected preview an assortment of new Audi diesel-powered vehicles, despite growing skepticism about the role of the high-efficiency engines in the American marketplace. Audi too missed the hybrid revolution.

“While the perceptions of diesel have changed for the better, consideration of clean diesel vehicles is hampered by the high cost of diesel fuel compared to gasoline,” says Bryan Krulikowski, author of the Morpace study. Fuel cost is the number one reason for not considering a diesel engine. Diesels continued to be viewed as noisy and smelly, “suggesting that some consumers recall diesels of the past and have not yet experienced or accepted the improved diesel technology available today,” according to Krulikowski.

Well, maybe they have just been stuck in traffic next to a Dodge, Ford or GM diesel pickup truck of recent vintage. They are so loud you can’t use drive-in windows to order fast food if one is in front or behind you in the line. And lord help you if a neighbor owns one and leaves for work early in the morning. Line haul tractors aren’t as the belch black smoke over our interstate highways are rolling anti-diesel campaigns, in my view.

Even among so called “clean diesel considerers,” 62% told Morpace they need more information about the usage of a liquid additive – urea, the same substance in urine – before determining whether or not they would still consider the technology.

“The urea issue could be a real sticking point for consumers,” explains Krulikowski. “A lot of consumers are on the fence because they are unsure of the maintenance required for a clean diesel engine. Manufacturers need to take the guesswork out of this process by coupling it with other major service items like oil changes.”

It turns out that urea, which in Orwellian fashion has been renamed by diesel makers as “diesel exhaust fluid,” is an inexpensive way to reduce nitrogen oxide emissions produced by diesel engines. NOx — a nasty life threatening pollutant that contributes to smog, asthma, and respiratory and heart diseases, among others – is a result of a diesel’s high combustion chamber temperatures that result from the extremely high compression ratios needed to ignite diesel fuel without an ignition system. The high compression ratios are the reason for diesels’ ~20% fuel economy advantage when compared to gasoline engines, but emission control requirements have driven the cost up and decreased the fuel economy advantage of diesel engines that were already heavier and $2000-$4000 more expensive than gasoline engines.

Starting 2010, all new diesel-powered pickup trucks will have to meet tougher federal diesel emission standards that will reduce  nitrogen oxide emission levels by 90% from 2009.  Urea, the least espensive  NOx treatment method, appears to be the preferred cleanup method by Chrysler, Ford and General Motors truck engineering groups.

Nonetheless, the ultimate size and timing of the anticipated diesel market remains under scrutiny. The drop in gasoline prices has wihtout question hurt diesels, and even ExxonMobil is saying that gasoline demand in the U.S. has probably reached its peak. The diesel outlook is worsened by the fact that diesel usually costs at least 10% more at the pump; and the pumps it is available at sometimes less than compelling places to shop. With acceptance in doubt and the now astronomical expense of making a diesel clean enough to comply with increasingly stringent emissions laws, it’s not surprising that a number of makers, ranging from General Motors to Honda, have either delayed or cancelled some of their planned diesel offerings.