JAGUAR is working on ways to ease its cars out of the gas-guzzling tax class created by the new carbon dioxide-based company car tax regime. But the manufacturer admits no firm decision has been made as to how it will clean up its current range so as not to incur punitive ratings from April 2002.

'There is still a lot of work for us to do,' said Jaguar's managing director, Jonathan Browning. 'However, we do believe the upper segment of the company car market is not as cost-sensitive to such issues as other parts of the sector.' Neither does he consider diesel as being a 'quick-fix' to address the situation. 'It is proposed - provisionally - that diesel should carry a 3% penalty, so we don't really favour that as the answer. Having said that, diesel does play a part in the overall landscape of Jaguar's future.' he said.

Although it is arguably true that the upper end of the new car market is indeed, generally the least cost-sensitive, the knock-on effect of having a range which carried a heavy user tax penalty could have a detrimental effect on residuals. The company car tax bandings are in 1% stages from April 2002, starting at 15% of list price for cars emitting up to 169.99 grammes of CO2 per kilometre to 35% for those with a 265g/km or worse performance.

With Jaguar's current range, the vehicle with the lowest CO2 emissions is the 3.0 V6 S-type with a tax rating of 268g/km, tantalisingly close to at least making it into a sub-35% banding for the first year of the scheme. The current Jaguar XJR has no chance at 309g/km CO2, but it will also be rated at 35% of list price as will supercars with outputs in excess of 400g/km. The new 'small' Jaguar, the X400, due to be launched next year, will almost certainly fit more happily into the bandings. Browning was tight-lipped as to whether a diesel option would be available with Jaguar's BMW 3-series, Mercedes M-class and Audi A4 rival.