Rising gasoline prices may fuel diesel auto comeback

Deran Keshian of Winchester, Mass., wanted a big car that was economical but gave him a lot of power.

Courtenay Cauble of Ridgefield, Conn., preferred small cars but wanted the best fuel economy he could find.

Both bought diesels. And both would buy them again.

Keshian, who owns a 1982 Cutlass 8-cylinder wagon, and gets about 33 miles to the gallon in highway driving, says his car is ''excellent!'' He's been very impressed with the handling and comfort. And the 1980 Volkswagen Rabbit that Cauble drives ''handles beautifully, and is very maneuverable.'' It gets 47 miles to the gallon on highways.

Their enthusiasm is one sign of a brightening outlook for diesel auto sales.

While demand has slackened in recent months, certain factors indicate a solid recovery may be in sight. For one thing, the gas price slide, which made diesels appear less economical in many consumers' eyes, is over. After edging above even unleaded gasoline, diesel fuel once again is the cheaper buy.

At the same time, the quality of diesel engines is on the rise. Their reputation suffered with early models that had troublesome converted-gasoline engines.

With the strong combination of higher-quality engines as well as competitive diesel fuel prices, many analysts feel that all signs point to a steady increase in diesel sales.

The picture isn't by any means rosy. For one, Chrysler Corporation recently announced that the diesel engines it plans to introduce in the 1984 model year won't meet federal emissions standards, and added that there wasn't any diesel engine they knew of that could meet the requirements. Carmakers are pinning their hopes on a relaxation of the Clean Air Act, currently being considered in Congress.

And diesels, especially American-made ones, have had a rocky career to date. Consumer groups have been springing up across the country during the past year in response to certain models, particularly those produced by General Motors, the largest domestic diesel producer, which consistently have had serious defects.

Nevertheless, according to John Hammond, an analyst for the consulting firm of Data Resources in Lexington, Mass., the bad reputation some diesels have had may turn around. ''Converted engines, which were used at first to try to meet the demands for fuel economy quickly, have inherent problems. But now the manufacturers are bringing out diesel engines which were designed specifically as diesel engines.''

Bill Curtin, sales manager for Peter Fuller Oldsmobile in Watertown, Mass., also emphasizes the importance fuel prices play in diesel sales. When diesel fuel was significantly less expensive than gas, he notes, it was natural that people would want to buy the more expensive diesel in order to get long-term fuel savings.

Today, he says, ''price and the poor quality of diesel fuel is reflected in the sale of diesel cars. If gas is the same price or cheaper, a gasoline-engine car will be more attractive. Also, the diesel has a disadvantage as it often smells and has a rough idle.''

Thus, despite improving quality, it's not easy to sell diesel-engine cars. Many problems with diesels have occurred because of improper maintenance by owners, thus leading to an impression that the cars are fussy and difficult to maintain. Diesel fuel quality also varies widely, leading some drivers, like Cauble, to buy their fuel from one reliable source as much as possible.

And then, the price differential between a gasoline-engine model and its diesel counterpart is about $800. Before small cars were the norm, fuel savings available were significant.

Currently, however, the purchaser has to drive a great deal if he is to see any savings over today's smaller, more fuel-efficient gasoline-engine cars. On the other hand, the diesel has about 25 percent better fuel economy than a gas-powered car. Its engine also wears longer and better than most gasoline engines.

Diesel car sales peaked at 7.7 percent of all automobile sales in December 1981. However, sales plummeted to 4.8 percent in the first quarter of 1982, compared with a 5.4 percent market share in the same quarter of 1981.

Sales figures can be deceptive, though. As analyst Hammond points out, the surge in the model's popularity was the result of a pent-up demand for the diesel-engine car. From now on, he says, sales will probably rise more gradually. The auto industry hopes the diesel will eventually capture about 15 percent of the automobile market.

Diesels have been attractive to consumers for a variety of reasons. They carried an element of prestige. The anticipated long life of a diesel-engine car was appealing. So was the glamour given such cars by the wide-scale shift of West Germany's Mercedes-Benz to diesel models, which now constitute 78.7 percent of its sales in US. When the first Volkwagen dieselized Rabbit was introduced, sales boomed.

Now, with the dropoff in diesel-car demand, Mercedes-Benz sales still are holding steady, but VW has seen a 9 percent decline in diesel sales. GM diesel-automobile sales are off sharply as well.

Many diesel owners, often those with foreign-made models, say they are satisfied with their cars, citing long engine wear and excellent mileage as two significant factors in their choice. Others, particularly GM diesel owners, have run into serious difficulties with their cars, with litigation as a result.

Consumers Against General Motors was started by Peter and Diane Halferty of Seattle, whose $20,000 diesel-engine Cadillac Seville ''self-destructed,'' they charge, after 3,000 miles. After numerous trips to the service shop, they got in touch with a consumer-complaint group and learned they were not the only ones with such frustrations.

They organized a group that says it now receives some 40 to 60 calls a day and is preparing to bring suit against GM because of the number of cases where engines, specifically the 5.7-liter model, have failed between 40,000-60,000 miles.

Economic factors as well as bad publicity about certain models have contributed to the diesel's decline. But, says John B. Schnapp, consultant at Harbridge House, Boston, US carmakers have made a major commitment to the diesels, and thus have more incentive to promote and improve them.