To prove its point, the world's fifth largest automaker is including a diesel engine in one of four concept vehicles it plans to introduce at next month's North American International Auto Show in Detroit.

"We still believe in diesel," Bernard Robertson, DaimlerChrysler vice president of engineering technologies, told reporters while showing off slides and video of the silver Dodge Power Wagon concept truck. "We may be part of a shrinking group."

Indeed, US and state regulators are increasingly pressuring the auto industry to cut vehicle emissions, which effectively could mean a ban on diesel engines, DaimlerChrysler officials said.

Last month, California mandated all light trucks -- pickups, sport utility vehicles and minivans -- will have to meet the stricter emissions levels of carsstarting in 2004. The state agency estimated that would cut smog-forming pollutants by up to 75 per cent.

Twelve states, including California, also are urging US Environmental Protection Agency regulators to toughen standards for motor vehicle tailpipe emissions and sulphur levels.

Robertson argues, however, that diesel is the most efficient engine today.

"Many new injection, combustion and exhaust after-treatment technologies are being developed to meet stringent future emissions standards," he said.

DaimlerChrysler officials also say the mandates are no different than the regulators picking which technologies will be developed. While not heavily used in the United States, diesel is much more widely used in Europe.

There has been a shift in the perception of diesel, which has come under criticism because of the high emissions of tiny particulates that lodge deep in peoples' lungs. They also are more expensive than gasoline engines.

Although automakers have refined diesel technology in the last 20years, it has failed to catch on in the United States because of the image that it trails gasoline engines in performance and is louder and smellier.

On the other hand, diesel engines are more fuel efficient and emit half as much carbon dioxide, thought to be one of the main contributors to global warming, than engines running on gasoline. Proponents point out that particulate emissions have been reduced to one-tenth the level of the 1970s.

Another factor that could make diesel engines an attractive option are the development of cleaner "designer" fuels, Robertson said.

DaimlerChrysler and Tulsa, Oklahoma-based energy technology firm Syntroleum Corp. announced in October they would develop sulphur-free fuels, derived from natural gas, that will burn cleaner than current crude oil-based fuels.

The lack of sulphur and other properties will improve fuel efficiency, reduce emissions and produce quieter, smoother running engines, the companies said. Syntroleum estimates the new fuels, which it expects tobegin making in the next few years, could sell for less than $1.50 a gallon.

The Power Wagon, equipped with a Caterpillar-made 7.2-litre turbocharged diesel engine, shares the name but little else with the 1946 workhorse of the same name. Robertson said the engine was meant as an "overkill statement" and the automaker has no plans to make it.

The concept truck Sports a more refined and modern design than its simple, rugged predecessor, but details of the design are being kept under wraps until the auto show. Power Wagon trucks saw duty from 1946 to 1968 as school buses, tow trucks, emergency vehicles and farm trucks.