New car sales figures released this week by the Society of Motor Manufacturers and Traders offer further proof that drivers are opting for diesel cars in increasing numbers. MG Rover should look to tap into this growing segment of the market by investing in its diesel engine technology and then marketing it aggressively as a possible means of turning around falling sales.

To achieve its target of profitability by 2006, MG Rover has been developing strategic relationships worldwide, the most recent being forged with SAIC in China last month. However in the UK the manufacturer is struggling to stay competitive against larger rivals. Sales of its Rover brand in June were down 42% on the same period 12 months before, while its sportier MG cars suffered a 19% slump.

The SMMT statistics point to the increasing popularity of diesel power, making it an area in which MG Rover could look to improve its offering. Diesels accounted for 31.1% of new car sales in the first six months of this year, compared to 26.2% in the same period last year, highlighting the fact that British drivers no longer consider them to be the poor relation of petrol vehicles. This has encouraged manufacturers to introduce better performing and cleaner engines. At present, both Vauxhall (owned by GM) and Jaguar (part of Ford) are aggressively marketing their new diesel engine technology to take advantage of rising demand - MG Rover should follow suit.

The provision of a highly developed, economical yet drivable range of diesel cars will soon become the norm for major players in the UK market. Diesels have always been far more popular in continental Europe than in Britain, and this experience gives the likes of Volkswagen and BMW a major advantage over MG Rover when it comes to producing them.

MG Rover has not traditionally had the same focus on the diesel market and, while this is now changing, it is still some way from being able to compete effectively in this segment. This mirrors other areas where the company needs to improve its offering, for example in superminis and MPVs. The company should continue to cultivate strategic partnerships with other manufacturers in a bid to reduce its overheads, but its primary focus must still be on offering customers the cars they want.