Many years ago, Peugeot pulled off one of the most impressive feats of corporate reinvention the motor industry has ever seen. Until the 1970s, along with half a dozen other semi-premium car-makers, it occupied a small and inhospitable piece of market territory between the mighty mass-market players like Ford on one side and prestige brands such as Mercedes on the other. Audi quickly twigged that there wasn't much of a future in this patch of automotive no-man's land and embarked on the decades-long move up-market that today allows it to look Mercedes and BMW in the eye. Alfa, Lancia, Saab and Volvo stayed where they were but only Volvo really made a decent fist of it.

Peugeot's response was different. It decided to enter the mainstream, adding smaller cars like the 104 to its conservative saloons, but, and this was the really clever bit, as it scaled up, its cars retained their distinctive style and driving qualities, making the 205, 305 and 405 some of the most desirable mass-market cars of the time.

And then, suddenly, Peugeot, previously so nimble in responding to changing conditions, somehow lost it. By "it" I mean that hard-to-define dash that set a Peugeot apart from other big-selling cars – a subjective eagerness, a certain sweetness in the operation of the major controls, and, above all, good looks. I suspect the precise turning point came when the pert and pretty 306 was replaced by the sobersided and sober-sided 307 in 2001.

Anyway, the significance of the 5008 is that it provides the best evidence so far that Peugeot has recovered its former vim. It's a sister to the 3008 people carrier but gets a larger body that can accommodate seven, and has the sort of handsome design in which Peugeot used to specialise. Our test car had the company's excellent 1.6 litre diesel engine, which is easily strong enough to allow this quite large car to keep up with UK traffic. This was paired with Peugeot's EGC transmission, a sometimes hesitant semi-automatic that redeems itself somewhat by offering the same performance and only slightly less economy than the standard manual. The spacious interior feels very well put together – a big area of improvement over older Peugeots – and our top of the range model even had a neat head-up display that projects speed and other data directly into the driver's field of view, a feature usually found only on much more expensive cars.

In all, the 5008 is a great effort – and there's more to come. Peugeot's dramatic new RCZ coupé looks like being just the first of a series of good-looking Peugeots if the design studies displayed by the company at recent motor shows are anything to go by.

Peugeot 5008 Exclusive EGC HDi 110

Price: £22,445

Top speed: 112 mph, 0-62 mph in 12.6 seconds

Fuel consumption: 55.3 mpg

CO2 emissions: 135 g/km

Rivals: Citroën Grand C4 Picasso, Ford S-Max, Renault Grand Scenic

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