Cloud rises over diesel plan for Nissan Maxima

Nissan North America may postpone a V6 diesel engine planned for the Maxima sedan in 2010.

Since the company revealed its Maxima diesel plan two years ago, gasoline prices have fallen dramatically, auto sales have collapsed and Nissan has begun reviewing product plans as it scrambles to restore profitability.

"We haven't reached a decision on the diesel yet, but we have to consider where we want to put our capital investments," says Larry Dominique, North American vice president for product planning. "We have to consider that the market for diesels will be too small to warrant the investment right now."

Of equal concern is a changing regulatory situation in California, which could dim the diesel market as early as this year. California wants to impose more stringent greenhouse gas rules on automakers that would make it difficult to sell diesel passenger vehicles in one of Nissan's biggest markets.

Dominique estimates that the California change would make it necessary for an automaker to sell two zero-emission vehicles in the state for every vehicle it sold with a diesel engine, to offset the diesel emissions.

The diesel engine planned for the U.S.-market Maxima is being built in Europe by Nissan's alliance partner, Renault. But Nissan faces the cost of adapting the French engine to U.S. emissions requirements.

Dominique said the re-engineering represents a sizable capital investment.

By Lindsay Chappell- Automotive News