The revised 320d - now with common rail injection and 150bhp - will initially go on sale in the UK next month with a Euro III compliant motor.
But fleet demand for Euro IV diesels - which would not be subject to the 3% penalty in company car tax under 2002's emissions-based system - has prompted a race to ensure company car drivers have access to cars that will keep tax liability to a minimum.
Audi has already said it is aiming to have Euro IV diesels available in the UK by May 2002 and expects stiff competition from BMW to be first on the scene.
The new 320d will have CO2 emissions of 148g/km for the saloon, and although it currently only meets Euro III standards, BMW is aiming to achieve Euro IV with no increase in CO2.
This would mean the 320d would remain in the 15% tax band for the first three years of the new company car tax rules. A spokeswoman for BMW said: 'The volume of cars we sell to fleets has made this an important issue for BMW.'