Will General Motors' New Diesel Chevy Tempt Angry VW Fans?

By Markets Fool.com

Will a diesel-powered version of the new Chevrolet Cruze tempt former VW diesel loyalists? GM's going to find out. Image source:General Motors.

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General Motors (NYSE: GM) will soon launch a diesel-powered version of its all-new Chevrolet Cruze sedan, aiming to pick up some of the disillusioned fans of Volkswagen's (NASDAQOTH: VLKAY) now-discredited "clean diesel" vehicles.

A diesel Chevy aimed at former Volkswagen fans

Last week, Vice President Dan Nicholson told trade publication Automotive News that GM sees an opportunity to pick up some of VW's former customers. He said GM is seeing strong demand for the diesel-powered versions of its midsize Chevy Colorado and GMC Canyon pickups. GM's research suggests there might be some unfulfilled demand for an affordable, good diesel sedan as well.

That's the thinking behind the diesel-powered Cruze that is expected to arrive at U.S. Chevy dealers next year. GM tried offering a diesel-powered version of the first-generation Cruze back in 2013. It got good reviews, but it didn't come close to denting VW's market share. In 2014, the last full year before its emissions scandal, the VW brand sold 79,422 diesel-powered vehicles in the U.S. As GM sees it, that's the opportunity.

The compact Chevrolet Cruze is all-new for 2016, built on a new architecture that makes it both larger and lighter in weight than its predecessor. The diesel-powered Cruze is expected to use a 1.6 liter turbocharged four-cylinder engine that was first launched last year in Europe.

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GM's 1.6 liter CDTI "whisper diesel" engine as used in the Opel Astra sedan. Image source: General Motors.

In Europe, that diesel engine and its larger 2.0 liter sibling are marketed as the "whisper diesels," touting their low noise and vibration. The 1.6 liter version is offered as an option on several Opel models, including the Astra sedan -- a close sibling of the new Cruze. In Europe, it's rated at 136horsepower with a stout 275 pound-feet of torque.

It's not a big market, but it's big enough to be worth a try

Diesel-powered cars have never been as popular in the U.S. as they are in Europe. But they were long a key part of Volkswagen's U.S. lineup. Those 79,422 diesels accounted for 21.6% of the VW brand's U.S. sales in 2014.

VW had won over many green-minded buyers by touting its fuel-efficient "clean diesel" technology. But that's now over: The U.S. government forced VW to stop selling its diesels in the U.S. last year after the company admitted having programmed the vehicles to cheat on government emissions tests.

VW executives say they won't try to relaunch "clean diesels" as a core part of their brand in the United States going forward. While diesels will continue to be an important part of VW's lineup elsewhere, at least for the near future, the company is changing course: CEO Matthias Mueller, who took over soon after the scandal broke last year, is refocusing the company on electric and hybrid vehicles.

That leaves an opening in the market for GM. Will the diesel Cruze sell in significant numbers? We'll find out next year.

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John Rosevear owns shares of General Motors. The Motley Fool recommends General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.