New technology in the Audi A3 range means the 2.0 TDI model now beats the BMW 118d on CO2 emissions.
The addition of Audi's start-stop, an automatic engine cut out used when the car is stopped in traffic, has resulted in significant reductions in CO2 emissions and improvements in fuel consumption.
Manual versions of the 140bhp A3 2.0 TDI in three-door hatchback or five-door Sportback form now produce CO2 at 115g/km compared with 134g/km for the previous version.
It undercuts the 143bhp BMW 118d by 4g/km and places it in the same 13 per cent benefit in kind tax bracket.
Fuel consumption is improved from 55.4mpg to 64.2mpg on the combined cycle, and is slightly better than the BMW 118d's 62.8mpg.
The A3 Cabriolet 2.0 TDI now has CO2 emissions of 119g/km - a 20g/km reduction and resulting in a 10g/km and five per centage point BIK tax advantage over the BMW 118d Convertible.
Its fuel consumption has improved to 61.4mpg on the combined cycle compared with 53.3mpg for the previous version.
The changes mean 40 per cent tax payers switching to these versions from the older version of the A3 2.0 TDI could see their annual BIK tax bills fall by several hundred pounds.
The start-stop system cuts engine power when the car is stopped and the gear lever is in neutral. Pressing the clutch to engage gear prompts the engine to restart within two tenths of a second.
Recuperation technology has also helped cut CO2 emissions by recycling some of the energy generated during braking normally dissipated as heat and teporarily stores it in the vehicle battery ready to reduce engine load when the car accelerates again.
Prices for the hatchback Audi A3 2.0 TDI start-stop begin at £18,860 on the road, with Cabriolet versions starting at £22,635.