Ford is predicting its share of the diesel market will rise over the next few years after announcing a £169m investment programme in its Dagenham diesel plant.

The company believes its proportion of diesel sales – currently 11% of total UK volume – will rise in line with current trends, which have seen the market increase by 18.5% this year to 32.5%, and is expected to reach 50% in 2007 when the production of 1.4-litre and 1.6-litre TDCi diesel engines begins at Dagenham.

The two smaller diesels, currently produced for Ford by PSA in France, will be assembled alongside the 2.7-litre V6 unit, which is used by Jaguar and Land Rover as well as PSA Peugeot Citroen.

The investment is expected to create around 460 new jobs and annual production of the two diesels will rise to 400,000 units. It takes total investment at Dagenham to £550m since 2003 and by 2007 Ford will have the capacity to produce more than one million engines a year.

“One third of all new cars sold in Europe are powered by diesel and this figure is expected to reach around 50% – 8m units – by 2006,” says Roger Putnam, chairman of Ford of Britain.

Ford’s decision to move production of the engines from Tremery and Douvrin will enable PSA to raise production of its own powerplants.