The Cars Are Better Than Ever, but Diesel Is Still a Tough SellA few years ago, experts predicted that the days of "dirty diesels" were over, and clean diesels would quickly reach the popularity of hybrids. They looked at the widespread acceptance of diesel vehicles in Europe and figured the same thing would happen here in the U.S. But the diesel revolution never happened. Fuel prices, lack of variety and an inclination toward hybrids kept diesel vehicles relegated to a niche market. But if the new breed of diesels is so good, what's holding them back?

Price of Fuel

According to the U.S. Energy Information Administration, since September 2004, the price of diesel fuel has been generally higher than the price of regular gasoline all year round. They cite three reasons for this: 1) Worldwide demand for diesel fuel has been increasing steadily, with strong demand in China, Europe and the United States putting more pressure on the tight global refining capacity; 2) in the United States, the transition to ultralow-sulfur diesel (ULSD) fuel has affected diesel fuel production and distribution costs; 3) the federal excise tax on diesel fuel is 6 cents higher per gallon (24.4 cents per gallon) than the tax on gasoline.

Although you'll get more energy from a gallon of diesel, many people only look at the price. Depending on the price of diesel fuel in your area, buying a diesel vehicle may feel like having a car that only takes premium fuel — which is as much as 25 cents more per gallon.

Not Enough Variety

While hybrids have become a serious consideration for mainstream shoppers, diesels still only apply to a small niche of shoppers. A person looking for a hybrid vehicle in 2010 has roughly 11 cars, nine SUVs and two trucks to choose from. But for consumers looking for a diesel passenger vehicle, their choices shrink down to four cars and five SUVs. We do not count the heavy-duty diesel trucks because they are considered commercial vehicles. This lack of variety causes its own set of problems, which leads to our next topic.

Vehicle Cost

The least expensive diesel vehicle, a Volkswagen Golf TDI costs more than $22,000. The remaining diesel vehicles are only among the luxury German brands.

Until diesel vehicles cost about the same as a Toyota Corolla, they will be at a cost disadvantage over less expensive gasoline vehicles. While federal tax credits offset this to some degree, it still takes a few years before a consumer breaks even on the sticker price via reduced fuel consumption. And when you factor in the higher price of fuel, it's enough to scare many shoppers away.