Production levels reached 19.7 millon vehicles, which included passenger cars, trucks and buses.

The passenger car sector accounted for 87 per cent of output - an increase of 5.5 per cent on 2006.

The demand for diesel production remained last year, with diesel powered cars accounting for 53.3 per cent of total new car registrations in the EU. Acea said it predicted demand for oil burners would remain stable in 2008. Booming demand across Europe saw production in the truck sector shoot up by 15 per cent. Volumes of commercial vehicles also rose but at the slower rate of 2 per cent. Meanwhile, Acea has predicted a stagnation of new car registrations in 2008. The trade association said new member states were likely to increase their 2007 sales volumes at the slower pace of 9 per cent, while the Western European market was likely to fall by 0.6 per cent.