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Presently priced from around £6000 to the £10,284 of the fuel-injected range leader that we tested, the Peugeot 106 line supplements, rather than replaces, the chic but ageing 205. Both the 106 concept and the 1.4-litre XSi model have been submerged in a torrent of adulatory praise since the UK launch at Motorfair last October, so we had great expectations of the smallest ‘Pug’.

We were not to be disappointed in an exhilarating and economical week, but there are some important handling areas in which Peugeot has failed to improve on its benchmark chassis work for the 205. Despite what we have read elsewhere, the 106 XSi does have some general handling flaws: the steering is ludicrously heavy at low speeds and there is pronounced wheel scrabble in very slow turns.

Otherwise there is nothing to stop this comparatively simple design, with its sohc, eight-valve engine, taking substantial sales from the 16v dohc that have become the class norm. For little over £10,000 the XSi offers fourspeaker stereo entertainment, remote control central locking, electric front windows, rather ineffective sports front seats and electrical operation of the heated door mirrors. Two channel anti-lock braking from Bendix is an option at £649 and a rather flimsy glass sunroof (retracting outside the roof panel) is priced at a further £384.62.

Pulling all this along is a 100 bhp version of the TU series 1360 cc motor, an iron block and alloy head unit that runs sweetly to its 6800 rpm power peak. Unlike its 45 bhp siblings, this TU motor contains a steel crankshaft, balanced by eight counterweights instead of four. For all that a single camshaft design is now beginning to be unfashionable amongst technocrats who can spout everything from 0-60 mph tenths to showroom equipment niceties, this little four is finely detailed and cleverly executed. Bosch Motronic MP-3 engine management co-operates with a four-branch inlet manifold that is made from recyclable polyamides that are reinforced by glassfibres.

A catalytic converter option delivers 95 bhp, but we had the 100 bhp version that returns 52.3 mpg without such cleansing effects when pottering at 56 mph. As ever, the more realistic figure was the urban average consumption, at 34 mpg: we recorded between 30.4-31.5 mpg to average 30.9 overall, a figure we found slightly disappointing in a small car, although we must confess that it was driven at every available opportunity. It remains one of the few small hatches that we would want to take around the block just for the hell of it.

Although it is only listed as offering 90 lb ft of torque at 4200 rpm, the XSi power unit prods the low weight three-door along with conviction between 2750-5000 rpm. This is partially because of the lowish kerb weight (860 kg), but also because the gear ratios are superbly spaced — and equally efficiently operated — to make the best of its accessible pulling capabilities.

As with all the best tiddlers, you practically never have to lose momentum, the Peugeot 205-based strut front and torsion bar rear suspension offering an outstanding compromise between small car ride quality and concise cornering capability. The ride, at all speeds, is as good as we can remember, shamefully better than most Escort-Astra clones in the category above.

A simple combination of vented front disc brakes and drum rears effectively reins in the car’s claimed maximum of 118 mph. More relevantly, it can bound from rest to 60 mph in some 9.5 sec and always seems eager to come out and play. If you are not feeling exuberant the noise in constant motorway use is reportedly wearing (it seemed like a limousine after my Honda CRX years!), so the 106 XSi is unlikely to head your list of choices as an executive express.

Decidedly more impressive is the amount of space packed into a shell less than 12 ft long. Again, the 106 humbled larger models when it came to the ability to accommodate shopping per square foot of space occupied by the car. To this reporter it seems as though the 205 is now redundant, because more can be packed into a 106, but the marketing department will make sure we cannot buy a 1.9-litre 106, thus ensuring that those seeking more performance have to buy larger models.

So far as the interior quality is concerned, I thought Peugeot (like Renault and Citroen) has received the ‘improve your perceived quality’ messages from all over Europe. I say ‘perceived’ because we did have the extending arm for the seat belt part company from its charge. Also, the prominent whine from the transmission is irritating.

The design of the in-built radio is particularly neatly executed and there is a feeling that Peugeot has taken some essential lessons from both the Germans and the Japanese in the design and quality of cabin fitments. A Peugeot is not a Honda or an Audi, but the gap has closed appreciably.

One unusual Peugeot point about the interior was that the instrumentation allowed a look at sump contents, a feature often missing in performance cars that operate regularly over 6000 rpm. The reporter liked the 106 XSi enough to try and buy one, and that is probably the highest praise a motoring writer can award.

Like many great cars it has obvious defects, but it also has that ’90s rarity: character in abundance.

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