Australia loves a diesel engine, but with emissions laws finally closing in many brands are moving away from the technology in favour of hybrids, EVs or, at very least smaller capacity turbocharged petrols.
Audi’s parent company, Volkswagen, is by and large moving away from diesel engines in Australia despite some very appealing options available on many of its passenger cars in Europe, where the tech remains popular.
Audi said it's not the same story for its premium buyers, who still flock to TDI versions of cars like the Q5 mid-size SUV and Q7 large SUV, which it plans to offer as long as its consumers want to buy them.
Audi Australia’s Head of Product, Matt Dale, explained in many ways the brand’s comparatively advanced diesel engines are actually advantageous in the era of Australia’s New Vehicle Efficiency Standard (NVES), which puts a hard cap on the amount of CO2 each brand’s fleet is permitted to produce without attracting financial penalties.
“It’s up to the consumer,” Dale said of diesel continuity at Audi.
“If you have a look at Q5 at the moment, the 40TDI produces 155g/km [CO2], but it’s 185g/km for the 45TFSI. Diesels are also more efficient than petrols in some cases. So in terms of NVES some diesel technology we have in those vehicles can be more beneficial than petrols.
“The Q7 for example, the customer likes to tow and diesel is good for that while coming with a lower CO2 footprint than an equivalent petrol.”
Audi confirmed its incoming mild hybrid plus technology is being developed not just with petrol drivetrains in mind, but also diesel. If released on a diesel engine it would be a rare example of diesel hybrid technology. It would open up the ability for it to continue offering diesels further into the future, or as Dale said, “as long as the consumer wants them.”
Biodiesel was also touted as a potential avenue for keeping the fuel type alive even longer, which is something Audi is investing in.
Dale said the opportunity “comes down to infrastructure” and the brand would be eyeing developments in Europe long before the fuel would be considered for the Australian market.
Diesel engines can be more efficient than petrols and produce significantly less CO2 emissions compared to a petrol equivalent, but they produce more toxic nitrogen oxides (collectively, NOx) per kilometre, which are harmful to respiratory health with long-term exposure.
The NVES introduced this year sets specific targets for CO2, a separate noxious emissions limit will come into effect on the first of December 2025 as part of a change to Australia’s ADR rules will specifically bring new vehicle NOx emissions in line with the Euro 6d standards in force overseas, impacting diesels sold from that date onwards.
Audi’s Q7 large SUV will be receiving a facelift in 2025, which will continue to offer diesel engine options. On top of this, Australia will be the only market in the world to offer its SQ5 with both a 3.0-litre turbocharged petrol engine and a 3.0-litre turbocharged diesel engine. Remarkably, the brand expects the split to be 50/50 despite diesel not traditionally being seen as a performance drivetrain. Additionally, Audi sells diesel versions of the outgoing A4, the Q8 large SUV and A8 limousine in Australia.
Dale also explained how Audi’s range of incoming EVs and its new mild hybrid engines would off-set any emissions impacts made by S, RS and diesel models in its range. Audi is unlikely to need to make changes to its line-up, at least for the first few stages of the new regime.
“At the moment we have a balanced approach. Across ICE, MHEV, and MHEV plus, and we do have a lot of pure electric vehicles coming over the next 12 - 18 months with Q6, A6 e-tron. Do we consider the market? Year on-year it’s 11.6 per cent up [for EVs], it is slowing, but it’s not going backwards. What we do consider is where we position those products. It’s about offering customers that choice.”
He conceded that “there’s a bit of a slowdown overseas” on electric vehicles, but this only meant good news for Australian consumers (and Audi’s compliance with NVES rules).
“With NVES, that has helped a lot in getting vehicles from Germany which we couldn’t get before. The government is actually helping us with those business cases. It's now a no-brainer to bring those vehicles in and offer the technology which reduces the emissions footprint across our fleet.”
“The tech we’ve got in the range, and those MHEV models allow us to continue our [high-emitting] RS models. It’s based on the volume of what you bring into the market. RS models, as a totality aren’t in the tens of thousands in volume, so we continue to bring them in.
“Despite a relatively high share of RS in Australia, they don’t have a massive impact - what does have a massive impact is selling more EVs and electrified vehicles - every single one of the MHEVs and BEVs you sell is able to off-set these models.”
Dale confirmed NVES is measured at a group level, so Audi is also able to balance its emissions across the entire Volkswagen Group, which is looking to introduce a wide array of lower emissions vehicles over the course of 2025 from its VW, Skoda, and Cupra marques.
Audi’s range is set to be nearly completely overhauled over the course of 2025, with model year updates coming for the A1, Q2, Q5, Q8, and e-Tron GT, and facelifts arriving for the Q7 and A3. It will also launch a new-generation A5 and Q5, as well as adding the fully-electric Q4, Q6 and A6 to its range.
Unlike most other brands, it will not only continue with diesel, but manage to maintain its signature 4.0-litre turbocharged V8 engine in the RS6 and RSQ8, which produces a whopping 276g/km of CO2 on the WLTP combined cycle.
The brand is hoping it can capitalise on its momentum to reverse an 18 per cent sales slide it has experienced thus far in 2024. It remains a few thousand sales behind its big two German rivals; Mercedes-Benz, which has had an even worse year, and BMW which has had a slight uptick despite tough market conditions off the back of several new-generation models arriving.
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