Company car drivers choosing a diesel hybrid as their company car will not incur the extra 3% in tax applied to other diesel models.

Both Peugeot and Citroën are introducing the technology, with the Peugeot 3008 Hybrid4 already in showrooms, while the Citroen DS5 Hybrid4 due in 2012. The manufacturers will use the technology in other models later.

It means a driver in a Citroen DS5 Hybrid4 would save up to £385 a year compared with if the car was subject to the additional 3% on BIK tax applied to diesel engine cars.

Andy Wady, Citroën UK fleet director, said: "This is fantastic news as we gear up for the launch of DS5 early next year. It's also great news for many company car drivers already attracted to DS5 and the Hybrid4 powertrain with its impressive fuel economy, low CO2 emissions, free VED, no London Congestion Charge, and now a BIK taxation rate at just 10%.

"Hybrid4 represents a significant environmental advance that helps us build on our commitment to drive down CO2 emissions. Already, a full 50% of Citroën cars sold this year emit under 130g/km of CO2 and there has been a five-gram decrease in average CO2 emissions for the European range as a whole."

The advanced Hybrid4 system delivers up to 200bhp, four-wheel drive capability, emission-free electric power for the city, and an acceleration boost function for the open road with total CO2 emissions from 99g/km.

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