The 65-mpg car Ford won't sell in US

The Fiesta ECOnetic could compete with hybrids and help remake Ford's image. But big obstacles are keeping the vehicle out of the US market. By BusinessWeek

If ever there was a car made for the times, this would seem to be it: a sporty subcompact that seats five, offers a navigation system and gets a whopping 65 miles to the gallon. Oh, yes, and the car is made by Ford Motor (F, news,msgs), known widely for lumbering gas hogs.

Ford's 2009 Fiesta ECOnetic goes on sale in November. But here's the catch: Despite the car's potential to transform Ford's image and help it compete with Toyota Motor (TM, news,msgs) and Honda Motor (HMC, news, msgs) in its home market, the company will sell the little fuel sipper only in Europe.

"We know it's an awesome vehicle," says Ford America President Mark Fields. "But there are business reasons why we can't sell it in the U.S." The main one: The Fiesta ECOnetic runs on diesel.

• Talk back: Should we bail out the automakers next?

Automakers such as Volkswagen and Mercedes-Benz have predicted for years that a technology called "clean diesel" would overcome many Americans' antipathy toward a fuel still often thought of as the smelly stuff that powers tractor-trailers.

Diesel vehicles now hitting the market with pollution-fighting technology are as clean as, or even cleaner than, gasoline-powered cars, and they are at least 30% more fuel-efficient.

Yet while half of all cars sold in Europe last year ran on diesel, the U.S. market remains relatively unfriendly to the fuel.

Taxes aimed at commercial trucks mean diesel costs anywhere from 40 cents to $1 more per gallon than gasoline. Add to this the success of the Toyota Prius, and you can see why only 3% of cars in the U.S. use diesel.

"Americans see hybrids as the darling," says Global Insight auto analyst Philip Gott, "and diesel as old tech."