More than half of all new cars sold in Europe last year had a fuel-saving diesel engine, the European car manufacturers group ACEA said Wednesday. Higher gas pump prices and diesel engine improvements helped boost sales of diesel-equipped cars to 53 percent of the nearly 15 million cars sold in the European Union, Iceland, Norway and Switzerland in 2007, it said, pointing to greater consumer demand for fuel efficiency. Diesel engines are about 30% more efficient than their gasoline counterparts, but emit more small particles responsible for smog. They benefit from environmental tax breaks in some countries, including subsidies for biodiesel - a fuel made from oil crops such as the bright yellow rapeseed that dots much of northern Europe. Most buyers pick smaller cars, ACEA said, and they also seem keener to buy less polluting cars with models emitting less than 120 grams of carbon dioxide per kilometer making up some 10% of overall sales. Renault CEO Carlos Ghosn noted the trend last week, saying environmental concerns were pushing customers toward vehicles with smaller or diesel engines, depressing sales for its Laguna model where it will now cut back output. Carmakers have also come under EU pressure to sell cars with lower carbon dioxide emissions to reduce the growing amount of greenhouse gas from transport as the region tries to tackle climate change. But gas-guzzling sport-utility vehicles, or SUVs, are also seeing high demand, up a fifth from the previous year and also taking a 10% share of the market. ACEA said carmakers expected new car sales to stagnate this year with western Europe falling 0.6% and faster growing eastern European nations seeing a slower 9% pickup from last year. "Of the main markets, only France and Germany are expected to register more cars than last year," it said. Vehicle production grew 5.3% last year with manufacturers such as Volkswagen AG, Peugeot Citroen and Fiat SpA turning out nearly 20 million new cars, trucks and buses. Europe is the world's largest vehicle producer, employing some 2.3 million people directly and providing work for another 10 million. The region makes about a third of the 50 million cars produced worldwide every year.