Of 1,834 diesel cars held in the CAP NVD database, less than 200 so far comply with the so-called Euro IV emissions standards which govern levels of certain pollutants.

As an incentive for business car drivers to choose a Euro IV-compliant vehicle the UK government will waive the 3% surcharge currently paid by company diesel car drivers on their benefit in kind tax bill. But although manufacturers are claiming to be on schedule to meet the new standards – which will be fully enforced from January 2005 – slow progress reflects uncertainty in the market about how best to achieve compliance.

For example, a range of technical solutions is available, including particulate traps, six-speed gearboxes and new engine management chips. But often such systems increase CO2 emissions. And because company car tax is now related to levels of CO2 output, such solutions could add to the company car tax bill for the end user and threaten to negate the savings offered by avoiding the three per cent diesel surcharge on non-compliant vehicles.

It is also a measure of the uncertainty which surrounds Euro IV compliance that few manufacturer websites carry comprehensive information about their current position, with even compliant cars, in some cases, still not listed as such.

CAP NVD Manager, Helen Butterworth, whose team of experts maintains more than five million pieces of vehicle information feeding directly into vehicle choice and leasing rate quotation systems across the industry, said: “With only around 10% of cars currently Euro IV compliant this is an urgent issue for manufacturers and fleets.

“Drivers wishing to choose cars now, which will remain tax efficient during their whole term in the car, are faced with little choice at the moment and this means potential opportunities for corporate sales are currently being missed.

“It is evident from even the major diesel-renowned manufacturer websites that the lack of current information on Euro IV compliance reflects missed opportunities thanks to the slow progress towards finding solutions.

“Among the difficulties faced by manufacturers is that some of the equipment needed to adjust the emissions can add in the region of £500 to the cost of the car. If this is passed through to the end user then the tax advantages of compliance are potentially wiped out.

“Unfortunately there are no simple solutions to this problem as long as we have a UK policy of CO2-based benefit in kind taxation and a European-driven policy concentrating on reducing other types of emissions.”