Tod Evans, the managing director of Peugeot UK, yesterday called for tax breaks to encourage use of diesel and LPG-powered cars.
"We know we are being fleeced as an industry by fuel tax, vehicle excise duty and so on," he said. "We must concentrate on how government can change its fiscal policy to encourage ... fuel-efficient cars."
His comments at a Guardian motor industry lunch in London came on the eve of Gordon Brown's pre-Budget statement in which the chancellor is expected to give little to the anti-fuel tax lobby.
Mr Evans said environmentally friendly engine technologies, such as fuel cells, were being developed, but the government should encourage technologies already available.
"I have been telling government not to penalise short-term solutions such as diesel, which uses 30% less fuel, and LPG (Liquid Petroleum Gas)," he said.
The government had been told that manufacturers had been making great strides in removing harmful particulate emissions. The latest Peugeot diesel engines, for example, had a sensor which told the engine to burn the smuts containing the particulates and particulate filters which were automatically cleaned every 400 miles.
The car industry's relationship with government over the last five years had been "reasonably strained". Labour had been seen as anti-car, but that had changed with the approach of the general election.
Mr Evans also warned that the strong pound threatened inward investment in car manufacturing.
