Diesel cars are continuing to grow in popularity although wider car sales in the UK look set to fall.

That is the view of the Society of Motor Manufacturers and Traders (SMMT), which has released its latest analysis of the domestic automotive market.

According to the SMMT's statistics, new car registrations topped 2,560,000 in 2004, nearly reaching the record high of 2003.

"Last year was only the third on record when new car registrations broke the 2.5 million barrier," commented SMMT chief executive Christopher Macgowan.

However, the SMMT is predicting that car sales will begin to slow in the next two years in the UK, predicting a drop off of more than 100,000 units this year alone.

There was some encouraging news for the diesel sector though, as demand "continued to surge".

Total sales of diesel vehicles hit a record 835,334 units during 2004, denoting a market share of more than 32 per cent.