CHEVROLET has expanded the appeal of its family hatchback Cruze model with the arrival of a new diesel engine capable of returning more than 70 miles per gallon.

The new 1.7-litre VCDi unit arrives next month and boasts emissions of 117g/km meaning it qualifies for free road tax for the first year and a benefit-in-kind tax commitment of 17 per cent.

Yet despite its excellent fuel economy the Cruze 1.7 VCDi is hardly short of punch, developing 130PS for acceleration of 0-60mph in 9.4 seconds and 124mph top speed.

Three trim levels will be available, with equipment identical to comparable models in the Cruze line-up.

So the entry grade LS, which comes with air-con, remote central locking, follow-me-home headlamps, electrically-adjustable mirrors and electric front windows, is priced at £16,725, while the mid-range LT is £17,825.

The range topping LTZ, priced at £18,685, ups the ante with the likes of cruise control, 17-inch alloys, auto-dimming mirror, automatic headlights, climate control, rain-sensing wipers and aluminium-effect interior detailing.

Though the new engine will initially only be available in the five-door Cruze, a Station Wagon estate version is due later in the year.

Chevrolet UK chief Mark Terry said: "The new 1.7 VCDi gives Chevrolet a real opportunity to compete in the core area of the five-door hatchback market, where tax implications, fuel economy and CO2 emissions are critical.

"Already a hit with private buyers, this new engine gives Cruze a much broader appeal to fleets and really helps underline our commitment to growth in this key business area."