LATER this summer Volvo will launch a range of Bi-Fuel cars that are not only kinder to the environment but can also potentially help company car drivers reduce their benefit-in-kind tax bills, while saving employers' money on fuel bills and vehicle excise duty.

The cars are powered by either LPG (Liquefied Petroleum Gas) or CNG (Compressed Natural Gas) as an alternative to petrol.

Volvo claims to be the first car-maker to design and produce a range of Type-Approved, gas-fuelled models with under-floor gas tanks - as well as petrol tanks - on the same production lines as its standard cars.

The S40 and V40 will be available with the petrol/LPG facility, while S60, V70 and S80 will be offered with either petrol/LPG or petrol/CNG capabilities. The S80 and V70 already meet Euro IV emission standards when running on petrol, and Volvo claims they are even cleaner when powered by gas.

The Swedish manufacturer anticipates a far bigger UK market for LPG cars than CNG, partly because a moderate LPG vending infrastructure already exists in Britain - around 1,000 sites across the country - whereas the availability of CNG is very limited, used generally only by commercial vehicle operators and local authorities with their own refuelling facilities.

Compared with petrol, LPG emits less carbon dioxide - so as well as being greener, will attract a reduced company car tax liability and vehicle excise duty for factory fitted bi-fuel cars. LPG is also cheaper than petrol at around 38p a litre - around half the price of unleaded or diesel - an advantage that more than offsets its higher fuel consumption than petrol.

Volvo estimates, for example, that a Volvo S40 Bi-Fuel should cover its additional purchase cost after about 21,000 miles - or 7,000 miles a year over a three-year period. Costs are further reduced if a company fleet uses 'bunkered' LPG at about 28p a litre.

Within a fleet context, Volvo's John Wallace, leasing and rental manager, says a fleet of 25 Volvo S40 Bi-Fuel cars using bunkered LPG and covering 15,000 miles a year could save over £69,000 a year by switching from unleaded. Safety-conscious drivers will be reassured that the gas tanks have been crash-tested under extreme conditions of heat and high pressure and to greater limits than petrol tanks, says Volvo. A closed fuel system prevents spillage and evaporation.

Both petrol and gas refuelling points are discreetly hidden behind the standard filler flap and with the gas tanks below the boot floor there is a clear load space in S60, V70 and S80 cars, and a slightly raised area on the boot floor - marginally reducing boot space - in the smaller S40 and V40 models. The underfloor tank is, however, at the expense of a spare wheel, with Volvo proposing a puncture repair aerosol to help the car limp to its nearest fast-fit garage.

Performance when running on gas is marginally down but not noticeable under normal driving, with power output from the S40 1.8, for example, quoted as 122 bhp under petrol-power and 120 bhp on LPG. The transition from one fuel to the other, however, is quick and smooth.

In its first full year of sales of Bi-Fuel models, Volvo expects to sell around 1,300 LPG versions, nearly half of these V70 models, while CNG sales are expected to account for around 150 cars. Prices of Volvo Bi-Fuel cars start at £17,000 for the S40 1.8 S LPG and rise to £25,260 for the V70 2.4 S CNG.

Benefit-in-kind perks to buying bi-fuel

BI-FUEL cars, and cars propelled solely by road fuel gas (either liquefied petroleum gas or compressed natural gas) will enjoy specific benefit-in-kind tax advantages under the new emissions-based company car tax system.

Cars that are pre-prepared to run on gas when delivered by manufacturers, like the Volvo Bi-Fuel cars, will receive the most significant tax advantages.

They will incur a benefit charge based on a percentage of their full official P11d price, determined by their carbon dioxide emissions when running on gas. This percentage is then reduced by one percentage point in acknowledgement of their cleaner emissions, and by a further one point for every 20g/km by which the CO2 emissions figure is less than the lower threshold on the sliding scale. In the 2002-03 tax year the lower threshold will be 165g/km of CO2.

Cars subject to aftermarket conversions to run on gas will be taxed according to their CO2 emissions when running on petrol (the only figure for which they are officially type approved). The additional cost of converting the cars can, however, be ignored for benefit in kind tax purposes. The percentage of P11d price (minus conversion costs) is reduced by one percentage point to take account of the cleaner gas emissions.