Is the Peugeot 208 the cheapest small car to own?

The three- or five-door will go on sale in the UK in June where it will replace the ageing 207 in Peugeot’s small car line up.

A rival for the Ford Fiesta and Vauxhall Corsa, the Peugeot 208 comes with Peugeot’s new front end, modern touches such as LED running lights, a higher quality interior and a selection of new petrol and diesel engines.

And it is these engines which lower running costs to deliver free road tax (of Vehicle Excise Duty) and, for London drivers, exemption from the London congestion charge.

The five-strong range of diesel engines from the 1.4-litre 68bhp unit to the 1.6-litre 115bhp option offer sub-100g/km of CO2 emissions to qualify for the exemption.

All but the former come with Stop & Start technology which turns the engine off when the car is stationary in traffic and instantly turns it on again when the accelerator is pressed.

The most frugal of the diesel engines delivers fuel economy of 83.1mpg – a record for a non-electric Peugeot car.

Peugeot will also offer a single petrol engine, the 1.0-litre 68bhp option, with free road tax levels of CO2 emissions and an impressive fuel economy of 65.7mpg.

The only engines to not be exempt from UK road tax will be the four larger petrol engines up to the 1.6-litre 156bhp unit.

Peugeot is relying on the ultra-low running costs to compete with the Ford Fiesta, the industry’s best-selling model in 2011.

However, it will also include more space inside, a new look and extra technology such as a touch screen, Bluetooth, USB connectivity and an optional satellite navigation on the majority of the new cars.

The new Peugeot 208 will go on sale in UK Peugeot dealerships from June and prices for the new 208 will be announced closer to the launch date.