Peugeot is hoping that the addition of the HDi will sustain its lower medium contender's success in the face of stiff diesel challenges from Vauxhall and Volkswagen. While they rely on direct injection diesel engines, Peugeot believes its newer common rail unit marks a technological step forward. It is certainly a massive advance on the old 1.9 d Turbo engine, cutting almost one second off the 0-62mph dash (12.8 seconds compared to 13.7 for the five-door hatchback), and posting a huge 27% improvement in fuel economy on the mixed cycle - 54.3mpg compared to 42.8mpg.
Significantly for company car drivers, this greater economy translates to a 20% reduction in the amount of carbon dioxide the 306 HDi produces (141 grammes per kilometre compared to 175g/km) which should equate to a useful bonus in the benefit-in-kind tax stakes. Fleets will also enjoy running cost benefits thanks to the HDi's 12,000-mile service intervals compared to 10,000 for the old unit. What the bare statistics do not reveal, however, is the improvement the HDi engine makes on the road.
Where you had to wait for the coils to heat up before starting the d Turbo, the new car fires instantly and without the agricultural clatter associated with old diesel technology.
It is not, however, as quiet inside the cabin as the 406 HDi, which has turned the automotive engineering world on its head by being more refined than Peugeot's new 406 2.0-litre petrol model. But any lack of refinement is not due not to the engine, but to the 306's lack of noise insulation, one of the few areas where the six-year-old car shows its age.
The newer VW Golf TDi, for example, seems more refined thanks to a standard of build quality not conceivable for a mainstream lower medium sector car when the 306 first appeared. Yet age has not dented the 306's visual appeal, and a charge around mountain roads showed its ride and handling to be bettered only by the Ford Focus, Vauxhall Astra, and perhaps the new Golf. Attacking steep Alpine routes showcases the strengths of Peugeot's 90bhp HDi, primarily its wide torque band and maximum pulling power of 200Nm at just 1,900rpm.
This means that in tough conditions the engine is flexible enough for drivers to treat it as an automatic and leave it in third, rather than continually stir the gearbox. Peugeot has used this broadened torque band to extend the car's gearbox ratios by 10%, improving the HDi's fuel consumption.
Fortunately, the longer gearing has not damaged the new engine's performance overtaking ability. This sparkling delivery of power has led Peugeot in France only to specify the HDi in the same trim as the 306 GTi-6, with a price to match, and the manufacturer has even hinted that it may fit the common rail diesel engine in its sporty, Pininfarina-designed 406 coupe. In the UK, however, Peugeot hopes to have the HDi available in all trim levels, and is suggesting that the new engine will command no list price premium over the 1.9 d Turbo it replaces, just as the 406 HDi 110bhp costs no more than the 2.1 turbodiesel model it replaced.
Availability may, however, be a problem given that demand for the HDi unit is soaring, and that Peugeot has to share the engine with sister company Citroen.
Production is running at 750-800 engines per day, but this will rise to 2,000 by July, which will allow Peugeot to fit it to the 206 by the autumn, and also to its 806 MPV.