Special Report on Diesel Motoring: Continent leads the way: Sales have almost cracked the 40 per cent barrier in France, and now British prejudice against diesels is dying, says Tony Lewin

TAKEN as a litmus test for national preferences and prejudices, the directors' car park at company headquarters is both instructive and illuminating. Large black, grey or silver limousines are the order of the day, naturally; in Britain they're likely to be Jaguars, Ford Scorpios or Rovers, in France big Renaults and Peugeots and in Italy Lancia Themas, with Mercedes and BMW models filling in as common European currency everywhere.

Yet in terms of their impact on the environment - and their cost to company coffers - those superficially similar directors' four-wheeled lifestyles could hardly be more different. For while in this country a leather-

lined Jaguar guzzling the firm's fuel at 20 miles per gallon may be seen as an acceptable or even desirable executive perk, that director's opposite number in mainland Europe can be confident of doing roughly twice the mileage per gallon and to be pushing out less than half the atmospheric pollutants - all because he's driving a diesel.

The same used to hold true in the less elevated segments of the market, too: diesels were shunned here, despite their 30-40 per cent economy advantage, their greater durability and their better resale value; buyers found it hard to take a longer-term view and stump up the extra 10 per cent cash at the showroom stage. At the root of it all was ignorance and prejudice, something which has been systematically whittled away by better and better diesel products.

Yet it is also understandable why Britons were prejudiced: diesel fuel used until comparatively recently to be more expensive than petrol, the company car taxation system still discriminates against diesels, and most diesel cars are still priced disproportionately higher than their petrol equivalents. Now, however, these barriers have been well and truly overcome, and from a springboard of under 1 per cent in 1982, one in eight buyers currently chooses the diesel option.

That places Britain on a level with Germany in the diesel penetration stakes, but still below the European average of just over 14 per cent. Countries which buy more are Belgium and, particularly, France, where over one in three cars is diesel and new diesel sales very nearly cracked the 40 per cent barrier this spring.

It is easy to see why French buyers are so fond of diesels: just as French petrol has historically always been notoriously expensive, 'gasoil' has been correspondingly cheap; even now, it is under two- thirds the price of premium grade petrol. The annual fuel bill for a French customer driving a 60mpg Citroen AX diesel would be roughly half that for an already economical 50mpg petrol-fuelled AX.

Hardly surprising, then, that four out of every ten Golf-sized cars sold in France is diesel-powered; further, France is by some margin Europe's biggest diesel market, with almost 210,000 examples sold last year.

Italy, too, was tipped as a major diesel market in the boom years of the 1980s when, encouraged by a healthy price differential between the two fuels, it nearly drew alongside France in its appetite for diesel power. One in five customers chose diesel in 1986, but the fact that the figure is now less than one in every fifteen - a collapse if ever there was one - is testament to how precarious the diesel's hold on market share actually was at the time.

Engineering and environmental factors had nothing to do with the collapse of the Italian diesel market - it was all to do with administration and taxation. Between 1986 and 1990 Italian petrol rose 41 per cent in price; the corresponding figure for diesel was 72 per cent, thus eroding the bulk of the fuel's cost advantage. Worse still, however, Italy suddenly imposed a supplementary annual road tax on diesel cars, in effect quadrupling the rate on small cars and more than doubling it for large models. The effect on diesel market share was a halving within two years, and now diesel sales are concentrated much more heavily on the bigger sector where high-mileage business users can more easily amortise the extra road tax outlay cost and begin to take advantage of the fuel-cost and mpg savings.

That, in turn, is why it is turbo-diesel Lancia Themas, Alfa 164s and Fiat Cromas and BMWs that flash past the traffic in the outside lane of the autostrada. Reflecting both the Italian tax break and business driver demands, they are just under 2.5 litres and perform as well as a good two-litre petrol car; Mercedes' 250 diesel turbo is the German firm's top seller in Italy, and it is this formula that looks like becoming the standard-format 'big' European diesel.

Insofar as it can be discerned, the pattern of diesel sales across Europe is a reflection of the tax and administration regimes prevailing in each market rather than mirroring any more deep-seated factors. One would have expected acutely environment-conscious Sweden, for instance, to be a keen customer for a very green form of motive power. But no: draconian regulations which treat diesel cars with as much bureaucracy as trucks - and which can even involve the fitting of tachographs - have ensured that only a handful are registered each year.

Yet while the Italian and Swedish experiences show how vulnerable diesel car sales can be to national fiscal changes, the converse also holds true: a freeing up of the excise burden on diesel cars can open up the market to far greater diesel penetration - as has happened with Britain and is now in progress in Spain. A secure home-market diesel base appears to be an important springboard to export success, too. There can be no doubt that the high international standing of models like the Golf Umwelt diesel, the Mercedes 300D and Peugeot-Citroen's 205, BX and XM are borne out of vital domestic experience.

It is tempting to suggest, too, that the Italian Fiat group might not be in its present difficulties had Italian domestic diesel sales - which Fiat, not unnaturally, spearheaded - remained high, Fiat-group diesel technology might have developed enough for the group to have state of the art (rather than also-ran) diesel models for export and domestic consumption. With the growing harmonisation of tax and administrative regimes across the EC, success in national diesel markets will increasingly be decided on the strengths of individual models and brands. Already, however, the pecking order is clear: Peugeot, one third of whose output is diesel, last year accounted for almost 330,000 of Europe's 2 million diesel car sales; Citroen, Volkswagen and Mercedes also inhabit the big league, each with very healthy shares of domestic and export markets.

It is interesting, too, to see how national tastes in diesel cars differ from those in petrol models. Britain's best-selling diesel is to be found in the 'D' (upper medium) class where the Peugeot 405 comfortably outsells all other diesels. Yet when both petrol and diesel are combined it rates only eighth in the overall sales charts. In Belgium the top diesel slot is contested by both the VW Passat and the Peugeot 405 - again both D-class models - while in nearby Germany larger and pricier diesels can outsell smaller editions by a significant margin.

Vying for top slot with the all-dominating VW Golf is the mid-range Mercedes, where almost half the examples sold are diesel and the individual best seller is the 250D, also Mercedes' top diesel in Belgium and France. In Britain the pricey 300D is Mercedes' most-sold diesel - an interesting result as, apart from the occasional Range Rover or Volvo estate, there is generally zero interest in the luxury diesel sector in this country.

Perhaps predictably, the Fiat Uno is Italy's most popular diesel passenger car, pursued by the bigger Fiat Tipo and the ever-present Golf. Rather more surprising is the fact that combined sales of the diesel Mercedes 190 and 200-300 series very nearly equal those of the Fiat Uno. Just as the Golf makes a clean sweep of the lower medium class in most European markets - though it faces an increasing challenge from the excellent Citroen ZX, now also available as a turbo-diesel - the Peugeot 205 cleans up the smaller supermini segment. It is first or second almost everywhere, and in France its 80,000 total puts it well ahead - though the new Renault Clio appears to be catching up fast. The launch this autumn of a diesel version of the smaller Peugeot 106 will add further spice to the battle - and provide some record fuel economy highs, if the record of the mechanically similar Citroen AX is anything to go by.

And in the final analysis it must be economy and environment-

friendliness rather than any temporary tax advantages that will guarantee the permanent spread of diesel power across Europe. Confidential industry sources have projected, perhaps unnecessarily gloomily, that in the 168-million car parc forecast for Europe in the year 2000, the 80 per cent petrol population will burn an 88 per cent share of the fuel. It would take a 37 per cent diesel share to provide the extra efficiency to compensate for the entire increase in fuel burn caused by the catalysts on the enlarged petrol car parc. Right now, given favourable pan-European tax treatment, it doesn't seem so impossible after all.

(Photograph omitted)