Every manufacturer is likely to tell you that their car will save you money. But when it boils down to it, the reality is often very different from the PR hype. So let's get down to brass tacks.

If you buy a frugal Toyota Prius with its clever petrol/electric hybrid engine, switching from an average car that returns around 30mpg and covers around 15,000 miles a year, your average annual fuel bill will fall from £2,022.75 to £923.63. That means a saving of £1099.11 at the cost per litre of petrol at the time of writing (89.9p). At the same time, thanks to a CO2 emissions figure of just 104g/gm, your company car exposure to Benefit in Kind (BIK) taxation for this spacious family five-door is going to be akin to what citycar users would normally pay the Chancellor.

Again, to be specific, on a £17,777 T3 variant, you'd be looking at attracting a tax level of just 22%, which means that for the tax year 2007/2008, you'd need to budget only £467.60 in annual tax payments for your smart new Prius - just £38.97 a month. Oh, and because it's a hybrid, you won't even pay the extended London (and soon Manchester) congestion charges. You'll need a lot more detail than this of course, so if you're considering this car as part of a small fleet of up to 25 vehicles in your business, it's well worth contacting your local Toyota dealership's Business Centre.

So we've covered the figures and proved that Prius ownership stacks up on the balance sheet. But what about the car itself? Well, it has in recent times been improved with changes to the styling of its headlamps and rear light clusters and a restyled front grille. Inside the cabin, comfort for passengers has been enhanced, with an adjustment to the hip point for those sitting in the back. Buyers will also find smarter upholstery colours, a soft-touch paint finish for the dashboard and the introduction of a leather-trimmed steering wheel across the range. Fresh options include full leather trim, new metallic paint finishes and, on T Spirit models, a rear parking monitor and Intelligent Parking Assist (IPA). Buyers have responded well to the sharky coupe-like styling and a neat front end. With split folding rear seats and a hatchback it's even agreeably practical, the body boasting a drag coefficient of 0.26.

The current Prius mirrors the first generation model's technique of being able to run on its petrol engine and then switch to exclusively electric operation when conditions are favourable. Toyota's Hybrid Synergy Drive offers impressive emissions and strong fuel economy performance for a car that now competes in the Avensis-sized Mondeo sector. Sometimes the Prius' silent running takes a little getting used to, but under many high-density traffic situations, this car offers totally emissions-free motoring.

"For the time being, this is still the benchmark if you're looking for a hybrid-powered car?"

A more powerful 50-kilowatt motor that operates at higher voltages offers 50 per cent more electric power than the Mk1 Prius, while sleek aerodynamics and an efficient petrol engine mean the car will accelerate to 60mph in less than 11 seconds, peak power being rated at 113bhp. That's comparable with a number of leading diesel cars but fuel economy is far in excess of what even the most parsimonious medium range diesel can manage, the latest Prius bettering 56mpg in town.

The Prius is the first car to feature a fully electronic 'brake by wire' system. Mercedes had dabbled with this set-up but Toyota offer a more sophisticated arrangement that allows for the brakes to recharge the battery packs under braking. Customers have been traditionally wary of these techniques, preferring to squirt some goo up a pipe instead, all the while conveniently ignoring the fact that their steering is probably electronically controlled. Kudos to Toyota for sticking their neck out and offering a system that may some day find its way into all cars.

The innovation doesn't stop there. As well as a push-button ignition system, the Prius also features a by-wire gearshift system that dispenses with the traditional floor-mounted gear lever. Instead the Prius opts for a dashboard-mounted joystick that drivers tap back and forth to shuttle through the gears. It's easy to operate, it looks funky and it frees up a little more space inside the car. A novel electrically operated air conditioning system also debuted in this Prius. Unlike conventional set-ups that draw their power from the engine's fan belt, this system can provide an uninterrupted supply of chilled air, even when the petrol engine has shut down in favour of the electric motor.

You can see why this second generation Prius has proved so popular - big, nicely styled, better built and more fun to drive than its MK1 predecessor. It also sweetens the deal by being more economical, more practical and cleaner to boot. What's not to like?