PSA Peugeot Citroën, Europe's second largest motor manufacturer, is hoping to steal a march on rivals by bringing in the "greenest" diesel engines.
The cars will be introduced to the British and European markets next year - two years before the stringent new regulations on emissions known as Euro IV are due to become law.
The company believes the move will help it make inroads in Britain by enabling motorists to avoid tax penalties that will be imposed on non-Euro IV compliant company cars.
From April company cars, which account for about half of all new cars in Britain, will be taxed according to CO2 emissions. Although diesel engines are reckoned to be up to 30% more efficient in this respect than petrol engines, the government has said it will levy a 3% penalty on non-Euro IV compliance vehicles to take account of other pollution concerns, including particulates.
"We feel that diesel has a great future in the UK," said Citroën UK's spokesman Julian Leyton. The planned launch was welcomed by the Society of Motor Manufacturers and Traders, which sees tremendous growth potential for diesel cars in Britain.
Diesel sales have risen sharply in recent months as company car buyers have responded to the planned new "benefits in kind" tax regime. Diesels account for 18% of the overall market compared with 40% for the rest of Europe.
"This will mean diesel offers a real alternative to consumers as it removes any lingering concerns about particulate issues and capitalises on the fuel consumption and CO2 emission benefits of diesel technology," said Al Clarke, the SMMT's head of communications.
· Volkswagen announced a strong overall 2001 profit but revealed a very weak fourth quarter and left investors begging for hints on its outlook.
VW was hit late last year by the financial crisis in Argentina and a two-week strike at one of its plants in Brazil.
Pretax profit rose 18.6% to €4.4bn (£2.7bn) while sales at the group grew to €88.5bn from €83.1bn, broadly in line with market expectations.
