By Samuel Ee

WHEN it comes to environmental friendliness, diesel is not inferior to the petrol-electric hybrid, so there is no reason to have a tax disadvantage, says Audi Singapore.

The German luxury brand said this when it recently introduced its first diesel-engine passenger car here - the Audi A5 3.0 TDI, a sporty two-door coupe with a three-litre V6 turbo-diesel engine and quattro all-wheel-drive.

Audi Singapore chose the A5 to kick off its "Performance + Efficiency" diesel campaign because it combines these elements.

"TDI is synonymous with economy and driving fun," says Audi Singapore managing director Reinhold Carl. "Diesel technology offers up to 40 per cent better mileage, reduces CO2 emissions about 20 per cent compared with petrol-powered engines and is on the same level as hybrids."

Apart from improved fuel economy, diesel has another well-known benefit - stronger acceleration. But despite being ultra-clean today, the fuel is still associated with the old image of a slow and smelly vehicle belching black smoke.

Hence, the sporty A5 3.0 TDI, priced at $206,800 with COE. With this model, Audi Singapore hopes to share its approach to sustainable mobility.

"A holistic, sustainable approach must address the total emissions issue throughout the life cycle of a car - from production, car usage to recycling," says Mr Carl.

Not many people are aware, but the manufacturing process accounts for one third of the car's emissions.

"So it's not only about the engine," Mr Carl points out. According to Audi, engine efficiency contributes only 31 per cent of fuel consumption.

A car's weight accounts for 12 per cent and its aerodynamics, 11 per cent.

Other factors, such as tyres, wheel bearings, air-conditioning and transmission, also play an important role in fuel economy.

So Mr Carl is recommending a "more results-driven tax structure" similar to Europe's CO2-based taxation.

Mr Reinhold Carl, Managing Director of Audi Singapore

"The tax structure should adopt an emissions-oriented approach as opposed to a concept-oriented approach," he says.

Currently, there is a special tax for diesel cars on top of road tax.

On July 1, 2008, the special tax structure for Euro IV private diesel passenger cars was cut to $1.25 per cubic centimetre (cc) of engine capacity.

Previously, a diesel car was subject to a special tax that was four times the road tax. For a 1,600cc diesel car, the new rule represents a near 25 per cent savings in special tax.

But sales of diesel cars have been low despite the reduction.

Volkswagen Singapore, for example, has sold about 20 diesel-powered passenger units of its large SUV model, the Touareg 3.0 V6 TDI. At $200,800 with COE, it costs the same as the 3.6 V6 FSI petrol version.

Diesel models are also offered in the showrooms of Chevrolet and Alfa Romeo, while they have to be specially ordered at Mercedes-Benz.

Audi says that this does not have to be the case. The carmaker currently offers the broadest range of diesel engines in the premium car segment. More than half of all Audi models sold in Europe are diesel-powered.

"The European market has among the highest emissions standards in the world," says Mr Carl. "It is by no accident that diesel is the top-selling engine in Europe as well."

Meanwhile, the fuel of the future is still elusive, he says. By 2020, only 10 per cent of the car population will be electric cars, while other solutions are not viable in the near future.

"Hence, diesel remains the most viable alternative for those demanding performance while choosing to be eco-friendly."

This article was first published in The Business Times.