Automotive sector pricing and technical data expert CAP has said it believes diesel cars in the UK have a promising future.

In a new piece of research, entitled Diesel Directions, CAP has worked with retail automotive report specialists Sewells Information & Research to analyse the industry and concluded that the diesel industry will develop in the UK.

However, the firm's analysts say there are some issues regarding the "old perceptions" that still exist in the industry, with some buyers continuing to dismiss diesel motors out of hand.

It follows increasingly worrying headlines that have forecast 'residual value meltdown' for the growing proportion of diesel company-owned cars.

"The growth in diesel registrations has unarguably created future risk and this research confirms that there can be little doubt that the supply and demand equation will change," commented CAP's Mark Norman.

"However, there is no evidence that the sometimes predicted 'meltdown' in diesel residual values will occur."

Mr Norman said that there were "areas of concern in the rest of the market", but reiterated his belief that the industry would flourish.

Car manufacturers in the US have also recently indicated they believe that the diesel market could be set to develop.

Rising gas prices may help fuel demand for diesel cars in a similar fashion to the increase in interest in gasoline-electric hybrids, with US president George Bush declaring that he wants diesel-power passenger vehicles to receive tax breaks similar to those offered to owners of gas-electric hybrid vehicles.

DaimlerChrysler has already announced that 60,000 consumers have indicated early interest in the diesel version of its Jeep Liberty SUV and the company predicts it will make 5,000 vehicles this year, producing more if demand remains strong, while Volkswagen is in the process of rolling out its own diesel models.