Hyundai Steers Toward Diesel SUV Offering

By Adrienne Roberts Features Dow Jones Newswires

Hyundai Motor Co. on Wednesday said it plans to sell a diesel-powered sport-utility vehicle by 2020, the latest car company aiming to revive U.S. interest in the diesel technology in the wake of Volkswagen AG's emissions scandal.

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The Korean auto maker fell out of favor with U.S. buyers because it reacted slowly to the shift from passenger cars to so-called crossover vehicles that are engineered with an undercarriage that is like a sedan but with an SUV-like body. The company now plans to introduce or re-engineer eight crossover models by 2020, including a diesel and electric offering.

While expensive, diesel engines tend to achieve better fuel economy than gasoline engines. General Motors Co. is among the companies also looking to boost sales of diesel passenger cars, including a Chevrolet Cruze compact car that can achieve better than 40 miles a gallon in certain conditions.

Sales of diesel vehicles have fallen since Volkswagen in 2015 pulled diesel vehicles from the U.S. market after it had cheated on federal emissions tests for several years. The German auto giant had been a leading seller of diesel passenger cars in the U.S. while most auto makers focus on gasoline engines.

Fiat Chrysler Automobiles NV and other auto makers have also faced federal scrutiny related to diesel emissions practices. Daimler AG has put its attempts to get U.S. certification for diesel passenger cars on hold and has said diesels have the potential to only "occupy a small niche."

Diesels are popular in big pickups, such as Ford Motor Co.'s F-150 and commercial vans due to the towing and efficiency needs of work trucks, but very few sedans or SUVs are equipped with diesels. Land Rover, Jaguar and BMW AG are among auto makers still selling diesels, but Chevy's diesel Cruze is the highest-volume offering.

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Diesel passenger-cars are outsold by electric cars, which are seeing growing popularity but still occupy less than 1% of the total U.S. market.

Mike O'Brien, vice president of product planning at Hyundai's U.S. operations, said one of the key sources of dissatisfaction with customers coming into the crossover segment is fuel-economy, and said the towing and durability capabilities of diesel vehicles will be a good addition to the lineup.

"From our perspective, there's definitely market opportunity, especially for people looking for a better fuel economy solution," he said.

Mr. O'Brien didn't outline specific product plans for a diesel vehicle or a specific timetable.

He said the company's broader push with crossovers is an effort to gain momentum. Hyundai has 4% U.S. market share, which is down from 4.5% at the same point a year. It sells about as many cars as Subaru Corp.

"It's no news to anybody here that we've been a little bit slow in terms of bringing the volume up of crossovers," Mr. O'Brien said during an event at the auto maker's U.S. technical center in Michigan. He noted crossovers are still the "number one area of growth in our company," with sales up 12% through October compared with the same period last year.

Write to Adrienne Roberts at Adrienne.Roberts@wsj.com

(END) Dow Jones Newswires

November 15, 2017 14:20 ET (19:20 GMT)