No diesel engine for Peugeot 208

PEUGEOT Australia has outlined plans to move away from diesel power in its smaller cars as customers instead flock to cheaper and increasingly efficient new-generation petrol engines.

The decision marks a substantial shift for the French company, which was among the first to offer diesel-powered passenger cars in Australia but will now offer its all-important next-generation 208 light car with only a trio of petrol engines at launch in September.

Peugeot Australia director Bill Gillespie said last week it was becoming harder to justify diesel power in smaller vehicles in the local market, saying that petrol now makes up a bigger proportion of sales on key models like the 308, as well as key rivals such as the Volkswagen Golf.

“It’s our view at the moment that diesel demand is pretty flat, based on the fact that the diesel/petrol (price) gap is still poor in Australia,” he said.

“In most cases, the factories ask you to pay more as a consumer to get a diesel, and if you are talking a $3000 to $3500 (price premium in the showroom) on diesel, and you’re paying more at the bowser, what we’re seeing is that diesel demand is flat and reducing.

“Look at the new (petrol) 208 I drove that car a couple of weeks ago and it’s very fuel efficient, (so) why would you need the diesel?”

From top: Peugeot Australia director Bill Gillespie Peugeot 4008.

While small diesels were once markedly more frugal than their petrol cousins, the proliferation of ‘downsized’ turbocharged powerplants with fuel-conserving technologies such as idle-stop has significantly eroded this gap.

Among the petrol engines offered on the forthcoming 208 will be a 1.2-litre three-cylinder unit that returns a fuel consumption figure of just 4.5 litres per 100km on the combined cycle – a figure matched by only a handful of small-capacity diesel engines.

Mr Gillespie denied the move was a major departure for the brand, but that it was simply “recognising the reality” that Australians are buying more fuel-efficient small-capacity petrol engines instead.

“We want to keep our diesel – we’re not walking way from that that is our brand DNA, we grew the brand on diesel,” he said.

“I’m just saying we don’t want to sit there and sell diesels and ignore the market demand. That’s not good business.”

Mr Gillespie said the company was still committed to diesel power on larger and more expensive cars like the 508, which can better absorb the price discrepancy and where the advantages in fuel consumption are more apparent.

While the popularity of diesel engines in light and small passenger cars is on the wane, the opposite is the case for the booming SUV market, with private sales of diesel SUVs up a substantial 62.2 per cent in the first half of this year.

Mr Gillespie said Peugeot would continue to look to diesel engines in this area of the market, “but we want to be careful, and there’s no way we’re bringing cars to market that have very low sales potential just because they’re a diesel”.

Case in point is Peugeot’s recently-introduced 4008 compact crossover, which is not sold here with a diesel option as the company could not source an automatic transmission.