PSA Peugeot-Citroen does not believe there is a business case for petrol-electric hybrid vehicles in Europe, a senior official has said.

Speaking at the UK media unveiling of a diesel-electric hybrid passenger van developed with partners Ricardo and QinetiQ to meet the UK government's Ultra Low Carbon Car Challenge (ULCCC), the automaker's vice president of innovation and quality, Robert Peugeot, said: "We don't believe there is a business case for petrol-electric hybrids in Europe. We are very clear about this.

"The cost of the hybrid technology today is high and if it is to produce only the fuel efficiency and the sort of emissions you can get with an HDi engine [the brand of PSA's latest generation of turbodiesels developed and produced jointly with Ford], why do it?" he asked.

Peugeot said a Paris-based car magazine had recently compared the Toyota Prius - the top selling hybrid car in Europe - with its rival Honda Civic hybrid sedan and a Citroen C4 hatchback with HDi diesel engine and manual gearbox on a mix of urban and fast roads around the French capital. The Prius consumed 6.7 litres of petrol per 100 kilometres and the Civic 6.4 - the C4 sipped diesel at 5 litres/km.

This reflects anecdotal evidence here in the UK that owners of the Prius and other hybrids are not achieving consumption anywhere near the 'official' EU test cycle figures in 'real world' daily driving.

"Clearly… when you have [a mix of road types], the fuel efficiency of the HDi engine coupled with a manual gearbox is by far the best you can get," Peugeot said.

"So we don't believe there is a business case for investing in developing petrol hybrids in Europe.

"Diesel hybrid is another story."

Peugeot was adamant that diesel hybridisation is the only short term available solution capable of bringing a significant break-through in terms of reduced fuel consumption and lower CO2 emissions on to the European market.

The automaker last January showed off prototype diesel hybrid versions of the Citroen C4 and Peugeot 307.

The new ULCCC vehicle, based on the production five-passenger Citroen Berlingo Multispace van-based Multi-Purpose Vehicle (MPV), takes the technology further with a more fuel efficient automated manual transmission, improved battery technology (a Lithium-Ion unit developed with help from military equipment specialist QinetiQ rather than the nickel metal-hydride type used in other hybrids), Valeo's combined starter/generator and more sophisticated diesel and electric motor control electronics developed by Ricardo.

The power units and battery pack all fit into the practical Berlingo without any loss of passenger or luggage space and the prototype emits just 99g/km of CO2 - equivalent, PSA claims, to 3.75 litres of diesel per 100km or over 75 miles per gallon. The car can go around 1,000 miles on a single tank of diesel.

PSA claims a 30% improvement in fuel economy and CO2 emissions compared to the equivalent HDi diesel powered production model on sale today and adds that the same diesel-hybrid powertrain in a European C-segment five-door hatchback - the Citroen C4 or Peugeot 307 - would emit only 90g of CO2.

Peugeot said the technology in this latest prototype would currently cost about £3,000 above what a European customer would be prepared to pay.

"He may pay £1,500 more to get diesel and there may be a business case to charge £1,500 above the diesel [for the hybrid model] but not £3,000.

"There lies the challenge - to get from this prototype to affordable technology."

He added that Peugeot was targeting achieving the £1,500 price premium for diesel hybrids by 2010.

Graeme Roberts

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