Sales of new diesel cars in Europe continue to rise as consumers switch from less expensive petrol cars in search of fuel cost savings, according to the latest quarterly pricing survey by PricewaterhouseCoopers and eurocarprice.com.

The study shows that diesels accounted for 49% of the European car market at the end of 2005 and that diesel is now set to overtake petrol as the primary fuel for new passenger vehicles in Europe during 2006.

Prices for diesel cars continued to rise more quickly (by 3.5% a year) compared with those for petrol cars (3.2%) in the final quarter of 2005, although the overall rate of price increases slowed as sales weakened.

New car sales fell in 13 out of the 19 countries covered by the survey. Overall, average prices at the end of 2005 were 3.4% higher than a year ago (in Q3 the average annual rise was 4.4%), while the total market was down by 0.6%.

A survey spokesman said: "Although diesel car sales will undoubtedly outstrip those of petrol in the coming year, the debate continues on the ultimate level of penetration they will achieve.

"They could potentially achieve 55-60% of the total market but the extra costs of making diesels to meet tougher emissions requirements means buyers will still have to pay a premium over petrol versions.

Fuel prices will be another factor. Demand for diesel models tends to be higher in markets where there is the largest price difference between petrol and diesel. Varying levels of diesel fuel taxation between countries will always be a constraint."

The most expensive car market in Europe is Denmark where new car prices are 91% higher than the eurozone average. The least expensive is Switzerland, where new car prices in the last quarter of 2005 were 8% below the eurozone average.

The survey noted that new car prices in the UK are rising more quickly than the European average and that the average price of a new car in Britain is 2% higher than in the euro currency zone.

UK new car prices rose despite declining sales in nearly every market segment and body style, which saw the total market dipping more than 4% below the previous year. Even sales of MPV (minivan) models, which had been strong, fell. Only SUV sales surged ahead.

Price increases for petrol models kept pace with those of diesel, although petrol sales fell by nearly 11% while diesel volumes increased by almost 8%.

Diesels now account for 36% of the total UK market; this figure is below the European average. This is partly due to the fact that the UK is one of the few European markets where diesel is more expensive than petrol.

Market performances across Europe as a whole remained varied. In the other 'Big Five' markets, sales volumes improved slightly in Germany, Spain and France, where price increases were below the European average. For the second quarter in succession, Italy recorded the largest increase in new car prices of any European market but sales continued to decline.

In Scandinavia, the recent growth in sales was reversed. Denmark again saw the largest market growth in Europe, but sales fell in Norway, Sweden and Finland.

Retail prices in Denmark, Finland and Norway are well above the European average. Price increases in Denmark are now very low.

In Eastern Europe sales continue to be poor, particularly in Poland where the market is still down over 30% year on year. Poland is also the only market where average prices are dropping. Price increases in Czech Republic and Hungary were both less than 1% in 2005.