Mercedes claims it has created the world’s most efficient luxury car.

The company has been introducing more and more hybrids to provide bigger efficiency gains, and the new S500 Plug-in hybrid is its latest fuel-saving flagship.

Offering the power of a V8 and the ability to average an astonishing 101mpg while emitting just 65g/km of CO2, the 442hp model can sprint to 62mph in just 5.2 seconds. All this from a car that is road tax-free and slips quietly into the 5% BIK tax bracket.

The advances come from its state-of-the-art plug-in hybrid hardware that combines a 333hp 3.0-litre V6 twin-turbo petrol with a punchy 116hp electric motor.  

In electric mode alone it’s possible to cover around 20 miles without a drop of petrol. This means that with the help of chargers at home and work (it takes between two and four hours to charge fully) a whole week’s worth of commuting could be completed without using any fuel.

To help the big Mercedes drink as little petrol as possible the firm has developed fascinating new tech that uses the navigation system, radar sensors and even the car’s camera to predict what lies ahead. Then it decides when to run electric-only or use the petrol power.  This means it coasts down hills and leaves electric running for the city. There’s even something called a ‘haptic’ throttle pedal that prods back through the pedal to tell you when you should lift off and save fuel.

So what’s it like? In electric mode it’s more refined than even a Rolls-Royce while offering effortless performance, although our car would pause before deciding to give you the full 442hp. Once awoken there’s even a nice V6 snarl – far more pleasant than a rattly diesel.

Behind the wheel, the S-class remains our favourite luxury car – it won the category prize in BusinessCar’s 2014 Awards – although the hybrid is noticeably more nose-heavy than the standard saloon, but wind back the pace and you’ll love the cosseting ride, world-class cabin and relaxing progress.

Apart from the punishing extra P11D cost over the diesel, the only real sacrifice is a boot almost a third smaller and the fact that on our drive we could only manage a diesel-rivalling 37mpg (others, though, cracked 50mpg.)

P11D price £87,910
Model price range £72,260-£87,295
Residual value 34.1%
Depreciat­ion £47,600
Fuel £5917
Service, maintenance and repair £3986
Vehicle Excise Duty £40
National Insurance £5680
Cost per mile 133.5p
Fuel consumption 100.9mpg
CO2 (tax) 65g/km (5%)
BIK 20/40% per month £73/£147
Service interval 2yrs/variable miles
Insurance (1-50) group 50
Warranty 3yrs/100,000mls
Boot space 395 litres
Engine size/power 2996cc/442hp
Top speed/0-60mph 155mph/5.2secs
On sale November 2014