BMW won't break into the diesel market in the United States until 2006 at the earliest but, five years after it last sold a diesel engine vehicle in the United States, Mercedes-Benz is launching the E320 CDI in April, motor industry newspaper Automotive News said in reports on its website.

BMW North America president Tom Purves reportedly said the carmaker will firm up its diesel plans for the US once low-sulphur diesel fuel becomes available in two years.

BMW does not have the production capacity to offer diesels in the US market right now, but would add capacity if demand warrants it, Purves added, according to Automotive News.

The report cited Purves as saying the first BMW diesel for the US is likely to be the X5 sport-utility, made in BMW's Spartanburg, South Carolina, plant where, ironically, X5 diesels are already built for export to Europe.

Last November, several groups of British journalists travelled to Spartanburg to try European-specification versions of the recently revised X5 line on local roads. Some told just-auto that the diesel versions were "very smoky" when running on locally-sold "truck grade" fuel which was apparently the only type of diesel available in the area.

Meanwhile, Mercedes expects to sell between 3,000 and 3,500 E-class diesel cars in the US market this year, Merecedes-Benz board member for sales and marketing Joachim Schmidt told Automotive News.

The paper said Schmidt is convinced diesel vehicles can be sold in the United States even though there is little difference in price between diesel and petrol. The selling point will be 30% better fuel economy than with a similar petrol engine, Schmidt reportedly said.

Automotive News said the turbocharged six-cylinder E320 has a fuel rating of 30 mpg (smaller US gallons, note) on the highway and can be sold in 45 states. Mercedes reportedly said the diesel model can be sold in all 50 states when low-sulphur diesel fuel becomes available in late 2006.

Schmidt told Automotive News that, if the E320 succeeds, Mercedes may bring other diesel engines into the United States: "Twenty years ago, 80% of our sales in the United States were [cars with] diesel engines."