New vehicle buyers are showing increasing interest in alternative fuels like diesel, according to Steve Kenchington, General Manager of Sime Darby Automobiles, the New Zealand concessionaire for Peugeot.

Diesel car sales have been rising in many markets, including New Zealand where they are taking 6 percent of the new passenger car market this year Ð up from 3 percent in 2004.

"The latest diesel engines are not only remarkably economical but they are refined and give excellent performance," said Kenchington.

"The 2.0-litre HDi diesel engine used in the Peugeot 407 sedan and 407 SW produces more torque than many of the larger capacity 3.0-litre V6 petrol engines available in New Zealand," he said.  ÒAnd with the distinctive style and flair of all Peugeot models there is no longer any compromise between good looks and fuel efficiency and powerÓ

In the drive for better fuel economy, sales of the new diesel 407 models in New Zealand are out-selling the petrol 407 variants.

Peugeot offers diesel versions of the 307 five-door hatchback, the 407 four-door sedan and 407 five-door SW sport wagon for the local market.

A recent study in Britain showed fuel economy remains the most important factor among car buyers.

Diesel power was chosen by 82 percent of people surveyed because of lower fuel consumption and the fact that diesel engines lasted longer and were more reliable than petrol equivalents.

While total new car sales in Britain for August were down 5.7 percent on a year ago, diesel car sales improved by 10.7 percent.

Meanwhile, clean running, environmentally friendly diesel-engined cars are being applauded as a better alternative to costly hybrid petrol/electric vehicles.

PSA Peugeot Citroen chief executive, Jean-Martin Folz, says there is more advantage in diesel engines than in developing hybrid petrol power sources.

"If you look at the gain in consumption and hold that against the cost of the engine then I do not see a viable market," said Folz at the recent Frankfurt international motor show.

"A hybrid engine is structurally more expensive than a diesel engine," he said.

Rising oil prices have heightened interest in fuel-efficient motor vehicles and alternative sources of power.

Hybrids, which were pioneered in the volume car industry by Japanese manufacturers, burn less fuel by adding one or more electric motors to a standard petrol or diesel engine. The batteries help power the vehicle and recharge by capturing energy during braking.

Folz aims to use PSA's HDi common rail diesel engine, which marries low consumption with good performance, to market the group's cars at a time of high petrol prices.

Diesel engines now power 37 percent of all new cars in Europe, and 62 percent of new car sales in France.

The industry predicts the diesel car penetration into the European car market will reach 45 percent by the end of the year.

With improving technology and better quality fuel, diesel cars like those from Peugeot are kinder on the environment.

A Peugeot 607 HDi with a silicon carbide honeycomb filter is already in production. The filter accumulates particulate matter for about 500 kilometres and then oxidises the particles by injecting a small amount of fuel.

Then an additive called Eolys heats the exhaust and burns off the particulates, eliminating 95 percent of particulate emissions Ð believed to result in less emissions than a petrol equivalent.