Consumer demands for better fuel economy coupled with pressure on carmakers to reduce CO2 emissions is likely to result in diesel sales eventually accounting for half of all passenger cars sold in Europe, according to independent automotive technology provider Ricardo Consulting Engineers.

In terms of overall market size, four of the top six markets - France, Germany, Italy and the Benelux countries - continued to experience rapid growth last year achieving record levels of diesel sales. Spain already exceeds 50% diesel penetration. Even the UK, the only European country to buck this trend over the past six years, showed signs of reversing its steady decline.

These are the findings of Ricardo's latest annual diesel report, which concludes that a further increase from the present level of almost one in three sales (up from 14% to 32% penetration over the past 10 years) is likely before the end of the decade.

The independent consultancy says that improvements in diesel engine performance and driving characteristics are helping to drive the rapid growth of diesel engine sales in Europe.

"The car buyer's choice today is fundamentally an economic one," says the report's author, Martin Love. "Although the near 30% fuel economy and CO2 advantage between diesel and gasoline engines has always existed, the enormous improvements in diesel engine performance and refinement have tipped the balance in recent years and are steering large numbers of the buying public towards the diesel option. Diesel pump prices, which across Europe are on average 16% cheaper than gasoline, merely heighten the financial advantage."

Commenting on the voluntary agreements between carmakers and EU environment ministers to reduce average CO2 emissions for new vehicles to 140g/km by 2008, Mr Love said: "To help meet these targets vehicle manufacturers have increased the attractiveness of the diesel option, further driving diesel sales and penetration."

"Last year we said it would not be surprising to see 40% share over the next 5 to 10 years," said Mr Love. "In view of the recent upward surge and with some major markets already exceeding this level we now see the possibility of diesel taking 50% of sales by the end of the decade."

Overall, diesel penetration across Europe in 2000 increased by 11% from the previous year's record to 4.76m vehicles, representing a market share of 32.3%. For the first time, both France and Germany exceeded one million sales.

France remains the largest market for diesel cars. In 2000, sales increased by 10.5% to 1.046m vehicles taking diesel penetration to 49%.

Following six years of decline in the UK, 2000 saw the first signs of a reversal in this trend with sales increasing by 3% to 313,000 vehicles and market penetration increasing slightly to 14%.

Although the UK remains the only major car market where diesel fuel is more expensive than petrol, consumer demand for better fuel economy indicates that there is potential for an increase in the UK from this level.

Diesel penetration of the UK car market has previously been higher and peaked at 22.6% in 1994 - almost a percentage point higher than the penetration in Germany today.