diff --git a/mercurial/changegroup.py b/mercurial/changegroup.py
--- a/mercurial/changegroup.py
+++ b/mercurial/changegroup.py
@@ -48,10 +48,10 @@ class nocompress(object):
         return ""
 
 bundletypes = {
-    "": nocompress,
-    "HG10UN": nocompress,
-    "HG10": lambda: bz2.BZ2Compressor(9),
-    "HG10GZ": zlib.compressobj,
+    "": ("", nocompress),
+    "HG10UN": ("HG10UN", nocompress),
+    "HG10BZ": ("HG10", lambda: bz2.BZ2Compressor(9)),
+    "HG10GZ": ("HG10GZ", zlib.compressobj),
 }
 
 def writebundle(cg, filename, type):
@@ -75,8 +75,9 @@ def writebundle(cg, filename, type):
             fh = os.fdopen(fd, "wb")
         cleanup = filename
 
-        fh.write(type)
-        z = bundletypes[type]()
+        header, compressor = bundletypes[type]
+        fh.write(header)
+        z = compressor()
 
         # parse the changegroup data, otherwise we will block
         # in case of sshrepo because we don't know the end of the stream
diff --git a/mercurial/commands.py b/mercurial/commands.py
--- a/mercurial/commands.py
+++ b/mercurial/commands.py
@@ -332,7 +332,7 @@ def bundle(ui, repo, fname, dest=None, *
         cg = repo.changegroupsubset(o, revs, 'bundle')
     else:
         cg = repo.changegroup(o, 'bundle')
-    changegroup.writebundle(cg, fname, "HG10")
+    changegroup.writebundle(cg, fname, "HG10BZ")
 
 def cat(ui, repo, file1, *pats, **opts):
     """output the latest or given revisions of files
@@ -1324,7 +1324,7 @@ def incoming(ui, repo, source="default",
         if fname or not other.local():
             # create a bundle (uncompressed if other repo is not local)
             cg = other.changegroup(incoming, "incoming")
-            type = other.local() and "HG10" or "HG10UN"
+            type = other.local() and "HG10BZ" or "HG10UN"
             fname = cleanup = changegroup.writebundle(cg, fname, type)
             # keep written bundle?
             if opts["bundle"]: