From no such vehicles being on sale at the beginning of the year, there is now a wide choice of these engines, ranging from superminis to people carriers and large-engined upper-medium saloons.
These engines are of vital importance to the fleet industry, where Euro IV-compliance spells lower company car tax bills.
Toyota was one of the first on the block with a Euro IV Corolla earlier in the summer, using a retuned version of its 2.0-litre D-4D engine.
We have chosen to pitch this car, in top-spec T Spirit trim, against two other lower-medium contenders, the class benchmark Ford Focus in 1.8 TDCi 115 Ghia trim and Renault's funky new Megane 1.9 dCi 120 Privilege, neither of which are Euro IV-compliant.
All are top of the range models and all are similarly powered, but which model will not only keep your drivers happy (both behind the wheel and in their wallet), and also please your finance director with their low running costs?
In terms of the latter, the Toyota takes an emphatic victory in running cost terms. Our figures show it will cost 25.18 pence per mile to run over three years/60,000 miles, compared with 26.90ppm for the Renault and 28.61 for the Focus.
Where the Corolla scores is in depreciation costs. CAP predicts it will retain 34% of its cost new after three years/ 60,000 miles, compared with 29% for the Megane and 27% for the Focus.
As depreciation is the biggest factor in our running cost equation, the Corolla's pence per mile figure alone ensures it takes the wholelife cost victory. And the Toyota also scores in terms of driver tax bills. Because it is Euro IV-compliant, the Toyota avoids the 3% diesel supplement and falls into the 15% benefit-in-kind tax band for 2003/04.
Combined with its lower list price compared to its two rivals, and it adds up to a bill of £42 a month for a 22% tax-payer. In contrast, the Focus and Megane fall into the 18% tax band, despite confusingly having lower CO2 emissions than the Toyota, and will cost the same driver £53 and £51 a month respectively in benefit-in-kind tax. So the Corolla has this sector sewn-up: it is the cheapest car to run and is also the easiest on a driver's wallet.
But can the Corolla compete on the road with the Focus and Megane?
Ford Focus TDCI Ghia
The benchmark vehicle in the lower-medium sector, the Ford Focus now has a smooth common rail diesel engine in place of the coarse TDdi unit
Delivered price, standard car (P11D value): £15,960
CO2 emissions (g/km): 145
BIK % of P11D in 2003/04: 18%
Graduated VED rate: £115
Insurance group: 7
Combined mpg: 51.4
CAP Monitor residual value: £4,300/27%
Depreciation (18.13 pence per mile x 60,000): £10,878
Maintenance (2.95 pence per mile x 60,000): £1,770
Fuel (7.53 pence per mile x 60,000): £4,518
Wholelife cost (28.61 pence per mile x 60,000): £17,166
Typical contract hire rate: £324 per month
Renault Megane dCi Privilege
UNUSUAL styling for Renault's lower-medium challenger, but under the skin the Megane is a good drive, backed up by a refined dCi common rail diesel engine.
Delivered price, standard car (P11D value): £15,460
CO2 emissions (g/km): 144
BIK % of P11D in 2003/04: 18%
Graduated VED rate: £115
Insurance group: 7
Combined mpg: 52.3
CAP Monitor residual value: £4,500/29%
Depreciation (17.30 pence per mile x 60,000): £10,380
Maintenance (2.20 pence per mile x 60,000): £1,320
Fuel (7.40 pence per mile x 60,000): £4,440
Wholelife cost (26.90 pence per mile x 60,000): £16,140
Typical contract hire rate: £308 per month
Toyota Corolla D-4D T Spirit
NOT a car that instantly comes into user-choosers' minds, but the Corolla with its Euro IV-compliant diesel engine means it leads the way in company car tax terms.
Delivered price, standard car (P11D value): £15,140
CO2 emissions (g/km): 151
BIK % of P11D in 2003/04: 15%
Graduated VED rate: £135
Insurance group: 6
Combined mpg: 49.6
CAP Monitor residual value: £5,125/34%
Depreciation (15.34 pence per mile x 60,000): £9,204
Maintenance (2.04 pence per mile x 60,000): £1,224
Fuel (7.80 pence per mile x 60,000): £4,680
Wholelife cost (25.18 pence per mile x 60,000): £15,108
Typical contract hire rate: £305 per month
THEY seem to be everywhere, but it's because they are so good. After five years rivals are only now coming close to matching the ride and handling balance of the Focus, and nothing on sale at the moment quite matches it.
We reckon the Megane has less body roll, but the Focus has better steering and a more comfortable ride – even on these optional 17-inch alloy wheels.
The sweeping curves of the interior still feel fresh, although we feel it could become more sober – like the C-MAX and Mondeo – when it is replaced.
Most will remember how radical the Focus looked when it first appeared in 1998, but now we have all got used to its appearance, it probably has the broadest appeal here. However, compared with the others Ford seems a bit stingy on equipment.
You have to pay to upgrade to climate control where both the Megane and Corolla have it as standard. And side airbags are an extra £150.
Despite having the least torque of the three engines tested, the Focus isn't short on performance. It develops 184lb-ft at 1,850rpm and also offers 'transient overtorque' which increases pulling power for short bursts to help with overtaking.
The Ford also scores highly for noise insulation with vibration from the diesel engine well suppressed and quiet while on the move.
Performance matters aside, the Focus also has the greatest luggage volume with all the seats in place at 350 litres, while our test car was fitted with the interior versatility pack which allows the front passenger seat to fold flat to form a table.
At a glance
DOES my bum look big in this? If victory in this test depended on attention-grabbing looks, the Megane would win by a mile. A combination of sharp edges and bold curves, the Megane brings Renault's design philosophy into the lower-medium sector.
While its appearance might not be to everyone's liking, it's a shape we are warming to and new Meganes seem far more abundant on the roads now than in the early months after its launch.
The Megane is much plainer inside than its unorthodox exterior would suggest. The centre console is clear and its controls and switches are easy to use.
In Privilege trim it also represents good value for money. Inside you discover part-leather seats as well as automatic climate control and a few other items absent from the Focus, such as side airbags and an alarm.
It is also surprisingly good to drive. It might not have steering as communicative as the Focus, but it has less body roll through the corners and its feels the fastest of the three to drive.
However, its six-speed gearbox offers a vague action and you are never sure if you have selected the right gear.
Build quality is reasonable, although that old Renault bugbear of dashboard electrics raised its head during our time with the car, with two warning lights showing on the dashboard. Previous experience with several Lagunas and a Megane have taught us that these warnings are invariably false alarms caused by a fault in the electrics.
The Megane is the only car here to have a five-star rating for occupant protection in the Euro NCAP tests, compared with four for the other two.
At a glance
WHEN the latest Corolla was launched 18 months ago it had the Volkswagen Golf firmly in its sights.
Quality was improved and prices were increased accordingly, although in this test the T Spirit still undercuts its two rivals despite its bulletproof interior finish.
The gaps between the dashboard and the doors are wafer-thin, the fittings feel more solid than the other two and with backlit instruments and metallic centre console it feels like a more expensive car.
However, it all feels a bit too plain on the outside and does not have the road presence of the other two.
The D-4D engine is the only one here that complies with Euro IV requirements, and is the most powerful diesel in the Corolla range.
With 207lb-ft of torque the Corolla wins on paper, but the maximum is only on offer from 2,000-2,200rpm, and with a five-speed transmission combined with the fact that it is the heaviest car of the three, it feels slower than the Megane and the Focus.
Its diesel engine is not as subdued at higher revs as the other two, and while it handles competently, it isn't a match for the Megane or the Focus on demanding roads. It does not turn in as sharply as the Megane and although body roll is limited, it is more pronounced than in the Focus.
The Corolla does exactly what it is supposed to do, and does most of it exceptionally well. However, in this company it lacks the sparkle of the Ford and the Renault and if drivers are allowed an element of choice in this sector, the Corolla might have to rely on the financial incentives of low BIK tax to win over drivers.
At a glance
Hats off to Toyota for bringing forward a Euro IV-compliant lower-medium contender early. As a result it wins this test thanks to its excellent performance in running costs and driver tax terms. It may not be the best car here to drive but for most drivers it will prove an adequate travelling companion. The Megane's fresh styling and good performance in running costs secure it second place. Third goes to the Focus – it is still the benchmark car in driving terms but its age, and residual value prediction, count against it.