OCTOBER was the highest-selling month in history for diesel-engined cars, powering sales to a certain record year for the fuel.

The latest figures from the Society of Motor Manufacturers and Traders (SMMT) show diesel car sales took nearly one third of the market during October with a year-end forecast of 27% – compared to last year's record high of 23.5%. And diesel penetration is expected to reach 34% of the market by 2005, seven points ahead of this year's highest-ever total.

The steady rise in diesel sales can be linked to changes in company car taxation introduced during 2002, which based tax bills on carbon dioxide emissions, with diesel offering lower CO2, as well as steady improvements in diesel engine technology.

The car market overall posted its first monthly decline since May, however, with a 1.4% dip in October volumes. Sales to 25-plus fleets fell during October to 78,581 but business sales reached 16,052, an increase of 5.4%.

Year-to-date registrations show a smaller drop for fleet sales of 2.5%, but business sales remain strong, with an increase of 7.4% over 2002, taking a 10% share of the market.

New car sales are still on target for a fourth consecutive record year, with the SMMT predicting 2.567 million sales by the end of December, about 165,000 up on last year.

Superminis remain the largest sector of the market at present, taking five of the top 10 places, while the Ford Focus has regained its position at the top of the table after slipping to second place in September.

Christopher Macgowan, SMMT chief executive, said: 'October registrations are stable in what has been a phenomenal year for the new car market. Diesel volumes are stronger than ever and are heading towards a record-breaking 2003. The supermini segment has also shown outstanding results with nine months of growth.'

However, he warned that the recent rise in interest rates meant the market was likely to ease over the next few months.