PEUGEOT plans to be the first manufacturer to offer a small family car with a diesel-electric hybrid power unit. It will be a version of the new 308, revealed last week, and will be on sale before the end of the decade.

EU carmakers have watched the success of petrol-electric hybrids from Toyota and Honda but claim their diesel-engined cars deliver better fuel consumption and produce less carbon dioxide. But diesel cars are unpopular in some countries, notably America. In Britain, hybrids qualify as alternative-fuel vehicles for low car tax and exemption from the London congestion charge, while diesels do not.

Peugeot does not sell in America, but sees an increasing trend for hybrids in Europe and elsewhere. Toyota sold more than 22,000 Prius cars in Europe last year, 5,000 of them in the UK.

The Prius combines a 1.5litre petrol engine with an electric motor. Its batteries are kept charged by the combustion engine and by capturing the energy generated by braking; unlike a pure electric car, the Prius never needs to be plugged into the mains. Critics say that its real-world fuel economy is not as good as official figures claim (65.7mpg) and that a car which has two engines plus an elaborate battery pack is costly both financially and in energy terms.

The Peugeot diesel hybrid promises to average better than 70mpg and have the lowest car-bon-dioxide emissions of any car other than a pure electric.

Peugeot boss Frédéric St Geours last week declined to give a price for the 308 diesel hybrid, saying “all the work going on now is to reduce the cost”.

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