Under the management of Henry Forbes, traffic superintendent from 1910 to 1943, the County Donegal Railways became pioneers in the use of
diesel traction. The first diesel railcar was built in 1930 (the first diesel railcar anywhere in the
British Isles), although a petrol-engined railcar had been built in 1926 before standardisation on diesel traction in 1934. Eight articulated diesel railcars were constructed by
Walker Brothers of
Wigan between 1934 and 1951, by which time virtually all passenger services were operated by diesel railcar, being much cheaper to operate than conventional steam trains. The railcars could only be driven from one end and had to be turned on a turntable to make a return journey. As well, they could not be worked in multiple, so if two railcars were working back to back, both required a driver. The railcars were incapable of hauling most freight wagons, so steam traction continued to be used on freight and excursion trains. The railcars could haul specially constructed trailers, and some lightweight freight wagons, which were painted red to distinguish them from the heavier wagons, which were grey. A diesel locomotive named
Phoenix (converted from a steam locomotive) was also used, but due to its noisy operation and slow speed (top speed of ), it spent most of its career shunting, travelling during its working life. ==Closure and winding up==