Have you driven a modern diesel? At lower speeds, they easily beat similar-displacement petrol cars off the line with superior torque. They are weaker at high speeds, but in normal (especially city) driving, a diesel is usually faster than a petrol.
But yeah, their main factor for popularity is the cost per km. They use less fuel than petrol engines, and the fuel is less expensive (in Germany). This is offset by higher road tax and insurance somewhat, but for commuters and others who drive a lot (>~20000km per year) diesels are a much more cost effective option in Germany than anything else.