Abstract:The search for alternative transportation fuels must be undertaken with an understanding of the retail markets for vehicles and fuels. The authors examine the history of the diesel car, as the only important alternative to gasoline in the U.S. household vehicle market, with the specific intent of exploring the conditions under which individuals would purchase a nongasoline vehicle. Diesel car sales rose from less than 1 percent of new car sales in 1976 to 6 percent by 1981, and then collapsed to less than 1 percent by 1985. A survey of diesel car owners was conducted in California to determine why diesel car sales rose and fell so sharply. The rise of diesel car sales was fueled by expected fuel cost savings. However, it was found that consumers relied on per gallon fuel prices, not per mile fuel costs or fully allocated total costs as the indicator of whether diesel cars were economically superior. The fall of diesel car sales was fueled by the declining per gallon price advantage of diesel fuel and specific perceived and actual problems with General Motor's (GM's) early 5.7-liter diesel engine. It was found that non-GM diesel car owners were no less likely to buy another diesel car of any make because of the public perception of the 5.7-liter GM engine, but that GM diesel owners and the general car-buying public believed diesel cars to be of lower quality than gasoline cars. It is concluded that fuel price and vehicle quality will be important determinants of the success of alternative transportation fuels and vehicles in the marketplace.