Exclusive Interview with Volkswagen's Diesel Maven

The Auto Channel's Mark Fulmer talks with VW's self-professed "Diesel Dork" about the Volkswagen Jetta Diesel and other diesel issues.

Male: Hi, we’re at the media center here at the Mazda Laguna Seca and we’re sitting with Volkswagens Keith Price who is going to tell us all about Diesel. So Keith, tell us what is the thing with the Volkswagen and the clean diesel? Keith: Thanks so much. I’ve got to tell you. We’ve sold 840,000 Diesel vehicles in this country since 1977. Thirty years ago, if you bought a Volkswagen rabbit with a diesel engine, you’re a chip’s gate. It was all about as many miles per gallon as you could get and it was all about keeping money in your pocket. Fifteen years ago when we launched TDI technology combining turbo charging, some electronic control, and emission controls, we started to see a different diesel buyer. These were the consumer savvy. They look at their cars at commodity investment. They read consumer reports. They knew that they could drive it for a couple of automotive life times and still have a lot of car left for resale value at the end of that equation. Now, we can legitimately present this technology as a green thing. So, the art part in our communications will be holding onto the chips’ gates and holding on to the savvy consumers. We’re running the market with a legitimate, environmentally, clean, and green diesel. Let me tell you how this connects. First of all, United States is several years behind Europe in terms of taking the sulfur out of diesel and we call that ULSD, Ultra Low Sulfur Diesel fuel. It is now widely available. As of October of ’06, it was mandated in 80% of the stations selling Diesel fuel here in the United States with the priority on states with California emission rules and those who have filed suit with Tier 2 Bin 5 regulations. We’re at an interesting position right now because for Diesel fuel, we’re in competition with the home heating oil market as well as commercial trucking and what you’ll find is Diesel people are not just buying to save money in mileage or to save money at the pump because frankly, the benefit isn’t there right now although Diesel does deliver about 35% at their mileage than a comparable gas motor. What we find is it’s all about resale value. A 10-year old Jetta TDI is worth two to three times as much as a gas car. That tells us that there are storng demands out there and what we found is that people who buy our Diesels tend to keep them longer, drive them farther, and take better care of them. Male: And that sounds just like the prescription that Americans will be want to a digger in the future but we won’t be able to get all of the new Volkswagen Diesels because some of the T1’s won’t be sold in America. Explain that. Keith: Absolutely! We’re going to launch our Diesel Technology in our traditionally highest value of Diesel vehicle which is the Jetta and it’s the most popular Volkswagen here in the United States. Generally speaking, we sell about a hundred thousand a year and 15% of those are Diesel powered. Two things are happening. We can put the clean Diesel which is 50-state accepted and certified and does not require urea into the Jeddah less expensively than in any other car. One could potentially require urea and then it’s over a weight limit. The passat would require the same urea technology and we have a real industry first and that we’ll have the only clean diesel where the customer is not part of the commission’s control system. Male: Interesting. Now, is it a similar situation on what happened a few years back when we saw Diesel kind of disappeared out of America? Heath: What happened was that you saw a Diesel’s window and you missed them in California because they’ve been gone here for a while. You can still sell a old technology Diesel 42 states here in United States but seven other states have followed California with adapting the Tier 2 Bin 5 regulations or essentially holding a Diesel power vehicle to the very same standards that a gas car is held to. Male: When I get to the gas pump and I put in the premium and I see the Diesel is even more expensive, is this a phenomenon just in California because of some environmental regulations or what are the reasons for these high prices? Keith: This is a phenomenon across the United States and it is essentially because we are in competition with the home-heating oil market and the commercial trucking industry and because of that we have what we would call inelastic demand and that it’s a pretty flat demand curve across the board and it’s always comes down to demand and supply. And right now, there is more diesel demand and we anticipate that this will get greater. In a nutshell at Volkswagen, we believe that clean Diesel can represent a viable alternative for more and more U.S. drivers so our goal is to get people to try this technology. With that in mind, as of June 1st of this year, there will be one Jetta Sedan with a clean diesel engine and a DSG transmission at every deal or just for sampling in for test drives and to encourage people to give it a try and that’s a two prong. And what we found is that people who have bad memories of a Diesel from the 70’s or 80’s are probably not going to consider it and yet if they are offered the opportunity and they are looking at the cost savings in terms of cost of ownership as well as their miles per gallon, it could represent an opportunity. So, those who are already in the—are past Diesel customers, they are already waiting with a positive hand. Male: What type of promotional or educational materials are you going to try to disseminate to get the word out about this new Diesel because it really does have the new look? Keith: We have two key communication points on that. First, let’s position Diesel as being good, clean, fun and to that end, this weekend at Virginia International Raceway, in fact I live form here and go straight there will be the inaugural race in the Jetta TDI Cup which is a young driver talent search for drivers 16 to 24 years old in identical Jetta Diesels and we’ll run that as a companion series. Now, how do we skew out the old myth that Diesels are slow? We take them on racing. The second part of our message is that Diesel has changed both the fuel and the technology. And finally, that Diesel can represent an alternative. We’re not going to knock the previous of the environmentalist number one list anytime soon but if we can enter the conservation with clean Diesel, it puts us miles ahead. Male: You know the bottom line to clean technology and to alternative energy is what it’s going to cost me? Now, there is a price to pay for the clean or the green. How does the clean Diesel cost savings compared to others? Keith: Well, we see as a cost-saving is in the total cost of ownership of the vehicle. When you add up everything from purchase price to all the fuel you put in at over 200,000 miles and what you can sell it for at that odometer reading, that’s where the diesel provides the win. Diesels are for people who love them and don’t leave them. One last key point on Diesel which we believe is the next step to the future. At Volkswagen, we believe clean Diesel provides the best and most accessible platform for sustainability. We all know about Biodiesel. Our diesels are certified to run on a B5 mixture. However, we’re in Volkswagen globally is working with the company called Corren in Europe to develop a second generation biomass fuel from plants stalk. You get the CO2 benefit from the cleaner burn and you get the CO2 benefit from the plant growth and we believe that clean diesel represents the best move towards a sustainable platform for the future because personal mobility especially at a place here like a race track is important to all of us. And when we talk about sustainability, you’re still going to pay four or five dollars a gallon but there will be fuel for you and there will be fuel for your kids. Male: So, when you look in the future, do you see any electric in the future beyond clean Diesel? Keith: Absolutely! I’d say electric and a fuel cell are the end game for just about everybody and Volkswagen was part of the California fuel sub-partnership. We have extensive development and have recently brought innovation into that category with a high temperature fuel cells pack which is actually the higher temperature raises the efficiency. So, we’re very excited about that but we all know that when we talk about hydrogen or a whole electric, we begin to talk about infrastructure and the beauty of clean diesel today and now and as a platform for renewability in the immediate future is that it can leverage our existing infrastructure. Male: For the consumer, I know I who have driven some alternative energy in electric vehicles, the experience is really the thing. How do you describe to someone who has preconceptions about Diesel or about electric or any alternative fuel the experience of driving and how do we get them to come out and test drive? Keith: You know that’s a two stage answer. And the first is let’s take clean Diesels. Diesels are not about horsepower. Diesels are about torque. If I had 100 horsepower outboard and I was going to tow six 15-year-old kids Cypress Gardens, Style, it’s not horsepower that gets them up out of the water skis, it’s torque and that’s what diesels are all about. It is that torque and that pulling power so it is different and you’re absolutely right. I guess our messaging becomes “try it” but instead of all that potato chips logo and “try it, you’ll like it”, it’s a little bit more of “try it, you might like it”. There are lots of different alternative fuel solutions out there. At Volkswagen, we believe clean diesel is our best bet. Will it work for everybody? Maybe not, but do we see a huge clean diesel in the future of United States? We believe it’s at a tipping point right now. Male: Keith, thanks very much! Keith: Thanks guys, have a great day!