The automotive technology provider forecasts that diesel's advantages over petrol in terms of both fuel economy and fuel price will continue for several more years.
'The overall west European picture continues to be one of rapid growth in diesel sales and market penetration,' said the report.
It found that sales of diesel-powered cars in Germany are close to matching sales in France, Europe's largest diesel market, while Spain and Italy - the third and fourth largest European diesel markets respectively - have also seen major increases in diesel car sales and penetration.
Report author Martin Love said: 'Prospects for the diesel car market seem to be for continued growth and it would not be surprising to see up to 40% penetration over the coming decade.'
He added that diesel penetration may eventually plateau because of improvements in petrol technology and potential diesel supply problems, but said diesel's head start over petrol in direct injection technology will give it an important lead in two key areas over the next 10 years - 'consumer demand for higher levels of fuel economy and a requirement for corporate average carbon dioxide emissions to be reduced'.