Independent Road Test: Bravo for the Punto: Gavin Green is entertained by Fiat's fresh and bright new hatchback

More than any other European car manufacturer, Fiat is under threat. It still dominates its domestic market, but slowly, surely, the once fervently nationalistic but increasingly Europhile Italians are being tempted by German, French and even British models. The greater solidity and improved build quality of the foreign makes are both factors, but the main attraction is novelty. When you've owned Fiats for generations, a change can be tempting.

Ten years ago, Fiat (not including its Lancia and Alfa Romeo subsidiaries) had 45 per cent of its home market; now it has only 34 per cent. The share will keep dropping: not only has the Italian market lost the cushions that protected it against Japanese-built cars until 1993, but the new EU deal, which comes into force in five years' time, will open up all European markets completely to Japanese imports. Italian sales of Fiats will fall further, despite the company's productivity (probably the best of any European maker) and vastly improved model range.

Mind you, the new Fiat Punto, which went on sale in Britain last week, is probably the company's most rounded and fault-free car yet. It is also one of the most impressive new hatchbacks I have driven.

With the anticipated decline in its home market share, Fiat reckoned that it made sense to aim its new small car more at Europe in general than at Italy in particular. Much greater emphasis was placed on northern European values, such as perceived solidity, safety, and fresh, jazzy colours. This is a tough little Fiat that feels, on the road, rather like a VW, but with more elan.

Not that its Italian background has been completely discarded. The Punto preserves Fiat's reputation for fresh, novel-looking small cars: although the nose is bland, its pert tail (with high, pillar-mounted tail-lamps) and the tall, rounded shape, set it apart from the mediocre mainstream. It is a pretty, distinctive car, designed by Giorgetto Giugiaro, who created the Fiat Uno and the original VW Golf.

Unlike in all other small Fiats, the doors shut with a reassuring thud (they have substantial side beams) and the car rides with a Golf-like authority. It absorbs bumps rather than quivering on them, as the Uno used to do. The Uno continues only in basic-model guises, before being pensioned off (probably to a Third World or East European car factory, as is the Fiat way).

The Punto is an eight-car range initially, although extra models, including a Cabrio and a six-speed version of the base 1.1-litre model, come later. Thanks to the weak lira, and Fiat's desire to improve its UK market share (small, but growing), prices are particularly keen.

The basic three-door 55S, powered by the sweet revving and long-lasting 1.1 'Fire' engine, costs just pounds 6,350, which is pounds 500 cheaper than the less competent base-model Fiesta and the much smaller Metro.

Move up to the 75bhp 1.2 engine, and prices start at pounds 7,898. The turbocharged GT, which uses the outgoing Uno Turbo's motor, costs pounds 10,995 - cheap for a quick hatch. The turbodiesel comes in at pounds 8,449. In every case, prices are low, and equipment levels generous.

Just as important, the Punto is outstandingly roomy. This is a Fiesta-class car that should suit Escort-class buyers. Front and rear leg- and head-room are generous, benefiting both from the tall body, which accentuates the overall feeling of internal spaciousness, and the big glasshouse (to improve visibility), which sets new standards for the class. The engineers really have tried to squeeze in every last square inch of cabin space. A six-foot passenger can sit quite comfortably behind a six-foot driver (rare in this class), and boot capacity is good. Escort, Golf, Rover 200 or Nissan Sunny buyers, trading down, would sacrifice nothing, except the size of their overdrafts.

On the road, the Punto is a more entertaining drive than most cars in its class - or in the one above. Both the 1.1- and 1.2-litre engines rev well, and, like all small Fiats, the Punto feels manoeuvrable, nippy and fun. It is not quite as Latin as Fiats used to be before the company evolved into a sober, well-rounded European maker: drive hard, and the featherweight steering feels too dead, really hustle, and body roll can become a problem. The Peugeot 106 is more fun at speed. But most drivers won't care.

Power steering, now standard only on the GT, comes later. It is almost unnecessary. An automatic also comes later in the year. There's not too much wrong with the manual box: the balkiness which used to plague the gearshift on some Unos has been eradicated, but the change still has a longer throw than the gearboxes of its rivals. It's light, though, and easy to use.

The Punto is a product of a new, more mature Fiat. It may not sell as well in Italy as some of its forerunners. But it is bound to do well in the rest of Europe, including Britain. It certainly deserves to.

SPECIFICATIONS

Fiat Punto 75 SX five-door, pounds 7,898

Four-cylinder engine, 1,242cc, 75 bhp. Five-speed gearbox. Top speed 106mph, 0-60mph in 11.5 seconds. Fuel consumption, 42mpg.

COMPARISONS

Ford Fiesta 1.1LX, pounds 8,395

Slower, coarser and less roomy than the Punto. Recent safety improvements have helped, but the ageing Fiesta is no longer at the cutting edge.

Nissan Micra 1.3LX, pounds 8,320

Well made, in Britain. With its ease of driving and cute styling, the Micra is the car that the Punto must beat. Loses to the Punto only on space and price.

Renault Clio 1.2RN, pounds 8,830

Great to look at, fun to drive. But not as solid as the Punto, nor as roomy or cheerful inside. Pricey.

Rover Metro 1.1L, pounds 8,155

Outclassed by the bigger, better Punto. Still a great town car, but can't match the Fiat for space, value or equipment levels.

Vauxhall Corsa 1.2GLS, pounds 8,365

Looks great, but doesn't ride or handle as well as the Punto.

(Photograph omitted)