Diesel car registrations in Europe fell by 7.9% to 6.76 million in 2017, representing just 43.7% of the market – the lowest share for the fuel in a decade.
Consumers and businesses mainly switched to gasoline cars, where registrations leapt by 760,000 units.
Demand for diesel has been falling as national and local governments review their approach to the fuel in the wake of the Dieselgate crisis and revelations about the impact of diesel fumes on health in urban areas, although experts point out that the latest diesel models are some of the cleanest cars available.
According to Jato, overall new car registrations reached 15.57 million in 2017, a year-on-year increase of 3.1% compared to 2016 and the highest volume of registrations since 2007, when 16.02 million units were registered.
These strong results can largely be attributed to Eastern and Southern Europe, where volume grew by 12.7% and 6.2% respectively, while the UK was the only top five market to see sales drop last year.
Overall EU car market growth slowed to 3.1% - a decrease on the 6.5% and 9.3% volume growth experienced in 2016 and 2015 respectively.
However, demand for SUVs continues to accelerate, with a record 4.56 million registrations in 2017, 19.5% higher than in 2016.
Alternative fuel vehicles also saw substantial growth from a low base, with demand rising 46.1% year-on-year during 2017 to 737,400 units, equivalent to 4.8% of the market.
Felipe Munoz, global automotive analyst at JATO Dynamics, said: “The vast majority of market growth in 2017 was driven by SUVs. Volume for the segment grew by 19.5% in 2017 and market share for SUVs jumped from 25.2% in 2016 to 29.3% in 2017.”
Volume growth came from the smaller D-SUV, C-SUV and B-SUV sub-segments, which grew by 34%, 21% and 17.5% respectively.
For the overall market, Volkswagen was the best-selling European brand and its key Golf model was the best-selling car, despite both experiencing slight year-on-year declines.