Good: comfort, styling, quality, space, sweet engine, running costs.

Not so good: steering lacking in feel, thick A-pillars obscure vision.

The outgoing Hyundai i10 was a decent little car, with the emphasis on little. It was ideally designed for shunting around town, ducking into tight spaces and generally being an exemplary little urban run-around.

As we have now surely become accustomed to, Hyundai is kicking things up a gear with its replacement. The new i10 shares but a name with its predecessor and it is one of the most singularly impressive cars we have ever seen from Hyundai, and given that firm's recent rampant successes, that's really saying something.

On the face of it, this is status quo ante. It's still a small car (just 3.6 metres long and weighing an admirably trim 933kg at the kerb) and while engine capacity has dropped 100cc to 1.0 litres, power remains more or less the same at 66hp. Not a lot, and neither is the 95Nm of torque, but both prove sufficient.

Where the new i10 seriously starts to deviate from its predecessor - and from most other similarly sized cars in general - is when you sit in it. Traditionally, driving a tall, narrow town car meant putting up with a seating position that made you feel as if you were perched on top of a bar stool. An uncomfortable bar stool. The Volkswagen up! changed all that, with a much more low down and laid-back seat that was conspicuously comfortable and the i10 takes that lead and runs with it. The seat and driving position (even with the lack of reach-adjustable steering) are just exceptionally good, and the whole cabin that surrounds you smacks of high quality and attention to detail. Yes, you will find some scratchy plastics around the place and when you tap the centre of the dash, it's hard and unyielding, not squidgy and soft-touch. Even so, this is a nice place to be and suddenly the prospect of a long journey in a very small car doesn't feel like such a chore.

Normally with a town car, it's the smallness of engine that precludes any ventures onto long motorways, but once again the new i10 confounds your expectations. True, it's no ball of fire and also true, you have to work it hard through the gears to get a serious response, but the beauty of this engine (and indeed the slick shifting gearbox) is that it's willing to work with you. In fact, the little three-pot will happily sing its warbling, raspy tune all the way to the 6,000rpm cut-out and a 120km/h cruise feels no more bother to it than sitting still in traffic.

Of course, do that a lot and you'll knacker the fuel consumption. Hyundai quotes 4.7 litres per 100km and we got an average of 6.0 litres/100km. Blame the frequent motorway trips we were doing, and the fact that, with just 500km on the clock, the engine was still loosening up.

Comfort was clearly the priority when it came to the chassis development, and here at last we find the i10's one weakness. Not the ride, which again is exemplary for a car measuring and weighing in such small figures, but the steering. It's just too detached, which sounds like a typical, road-tester-y complaint, but actually you notice it in town as much as in fast corners - there's just not enough information about what the front wheels are up to. Still, it's surefooted enough and never gave cause for concern even in windy, wet weather.

Our Deluxe model came with alloy wheels, air conditioning, Bluetooth telephony and an iPod connection amongst other toys, which make its €13,495 price start to look reasonable. There is a cheaper Classic version, but it's far barer inside and most i10s sold in retail are likely to be Deluxe spec.

If you're in the market for a small hatch (say, a Fiesta or a Clio) then you really should consider the Hyundai i10. Aside from outright boot space it's a match for cars from the class up when it comes to refinement, quality and even rear seat space, which is far better than expected. The Volkswagen up! has a slightly classier looking cabin and the Fiat Panda has nicer steering, but the i10 hits back hard with that brilliant five-year warranty and the brand's twin reputation for vehicle longevity and customer service. It is, quite simply, a brilliant little car where for once the 'little' part is actually the bit you notice least.