A last-minute report submitted by Volkswagen on the fuel consumption of the 36 cars bought for senior officials has saved the government from embarrassment. The administration was criticised earlier this week for its decision to buy 36 Volkswagen Phaeton 3.2Ls, costing HK$340,000 each, to replace the BMW 735iL fleet bought in 1997 for ministers and permanent secretaries. Officials had previously admitted the Volkswagen Phaeton 3.2L failed the fuel-efficiency standard. But now the logistics department says the saloons could meet the standard on fuel efficiency and emissions with a more effective exhaust emission control system. As a result, it said there was no need to revoke the contract. The department said the confusion originated from a 2003 test report presented by Volkswagen in the public tender issued in April. It also clarified that the 3.2L model was not on the list of the 10 lowest fuel-efficient cars issued by the United States Environmental Protection Agency. Despite this, the 3.2 model only achieves around 7km a litre in urban areas, according to Volkswagen's British website. The department also said the old BMWs currently used by ministers and permanent secretaries would be replaced as it was more costly to repair and keep them than to buy new ones. Annual maintenance costs for the old cars are around HK$47,000 to HK$59,000 a year. The department also said objective criteria for vehicle replacements, which had applied since 1999, had been recommended by the Audit Commission. In the current financial year, the government will spend HK$90 million to buy 529 vehicles including buses, motorcycles, goods vehicles and saloon cars. Under a policy announced by the chief executive, a tax concession of up to 30 per cent of a vehicle's first registration tax, or a maximum of $50,000, will be granted to buyers of cars emitting less than half of the Euro IV standard and which are 40 per cent more fuel efficient than similar classes of cars by weight. A source close to the department said the new approach would be incorporated into the buying policy as far as possible.