The Department of Trade and Industry, through its Powershift alternative fuel vehicle funding subsidiary, is set to announce incentives to encourage fleets to buy the Honda Insight, which entered showrooms this week, and the Toyota Prius, which is due to go on sale in the autumn.
The two manufacturers have been lobbying for Government grants for their vehicles, claiming that by combining efficient petrol engines with electric power, the hybrids are the answer to cleaning up the environment.
Honda says it expects to sell up to 500 vehicles and Toyota up to 1,000 units in the UK - estimates which will be used to calculate a level of grant to be paid direct to the manufacturers, which are then expected to cut the on-the-road price of the two vehicles.
Estimates as high as £2,000 have been given, which would cut the on-the-road price of the 1.0 litre Insight and 1.5-litre Prius to £15,000 and £17,000 respectively.
Jonathan Murray, head of transport for the Energy Saving Trust, said: 'We have been in discussion with Honda and Toyota. A final decision on the level of grant will take until the end of June.'
The two models could also gain from benefit-in-kind tax concessions under the new carbon dioxide-based emissions scheme due to be introduced in April 2002.
In the March Budget, Chancellor of the Exchequer Gordon Brown said he was prepared to give incentives to electric/hybrid cars in recognition of their 'clean' qualities and their higher list prices. A consultation exercise on potential tax concessions expires on July 31.
Toyota marketing director, Paul Philpott, said: 'While there is as yet no defined tax category for hybrids, we feel encouraged by the response being shown by Whitehall and have every reason to be hopeful that some support will soon be forthcoming.'
A Honda spokesman added: 'The DTI recognises the validity of our claims and is prepared to do something about it, which is good news for fleet customers.'
Talks between the two companies and the DTI followed a call from Toyota GB managing director Graham Smith, urging the Government to introduce a system of environmentally-friendly vehicle rebates to encourage fleets and company car drivers to take to the wheel of petrol/electric cars.