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  Business Times 29 Sep 07
More diesel cars may hit roads as fuel cleans its act
High diesel tax being re-examined; move may pave way for attractive alternatives
By Samuel Ee

(SINGAPORE) Passenger cars with diesel engines could be a common sight on Singapore's roads by as early as 2009.

It is understood that the government is studying the possibility of reversing the prohibitive registration taxes currently levied on privately owned diesel-powered cars.

If this so-called diesel tax is lifted in two years' time, it would make these cars cheaper to run than similar petrol-driven models and a more attractive alternative in this era of high fuel prices.

Currently, anyone registering a private car with a diesel engine has to pay a diesel tax in addition to the road tax. This diesel tax is six times the road tax of an equivalent petrol-driven car. If the car complies with the stricter Euro 4 emission standard, however, the diesel tax is four times the road tax of an equivalent petrol-driven car.

But it is believed that a high-level inter-ministry group has been re-examining the issue because of the huge advances made in diesel technology.

A diesel-engined car now is about 25 per cent more expensive than a petrol one. Policy initiatives could give it a boost.

The Energy Policy Group, which was formed last October to formulate and coordinate Singapore's energy policies, has since launched initiatives in energy conservation and alternative energy. It is led by the Ministry of Trade and Industry and involves other ministries like Foreign Affairs and Environment and Water Resources, as well as agencies such as the Economic Development Board.

Diesel vehicles have long had a bad reputation for dirty emissions. But advancements by leading European car makers have resulted in clean diesel technology that substantially reduces soot and other pollutants with catalytic converters and particulate filters.

For example, Germany's Volkswagen (VW) is considered the benchmark of diesel technology. VW is Europe's biggest car maker and 40 per cent of the cars it sells in Germany have diesel engines. One high-volume model there is the Volkswagen Passat 1.9 TDI with a 1.9-litre turbo- diesel engine.

The sedan's popularity is due to a few factors, explains Olaf Duebel, managing director of Volkswagen Group Singapore.

'Customers who use our diesel cars are saving money because diesel costs less than petrol, and the fuel consumption of a diesel car is lower than the petrol equivalent,' he says. 'The diesel engine also has higher torque, so there is better acceleration and this means the car is more fun to drive.'

The price differential between diesel and petrol is attractive. In Singapore, the former currently has a pump price of $1.303 per litre before discount. By contrast, the cheapest grade of petrol - 92 unleaded - is $1.753 per litre. This helps to offset the higher purchase price of a diesel car.

In Europe, diesel models cost about 10 per cent more than a petrol version. But this premium is down from a decade ago when it used to be about 20 per cent.

Dr Duebel says VW diesel models are already operating successfully in Asia-Pacific countries like Taiwan and New Zealand, where they are number one in those markets.

He adds: 'Volkswagen cars are already equipped for the usage of diesel in Singapore, should the diesel tax be eased.'

One company that has been hoping for a change in the diesel tax policy is Bosch. The leading maker of diesel-engine systems was in Singapore in November 2005 to promote the message that diesel is 'clean, economical and fun to drive' and to urge a rethink of the tax policy by the Singapore government.

Bosch says modern diesel systems reduce fuel consumption by a third, while giving up to 50 per cent more torque than a typical petrol engine.

The German automotive components giant supplies such systems to car makers like Volkswagen, Audi and Mercedes-Benz.

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