HONDA knows a thing or two about building small cars. When the twin-cylinder, 354cc N360 was launched in 1967, it became Japan’s best-selling car within eight weeks, writes David Duffy.

Five years after that the Civic was launched and 37 years on, that name is still going strong worldwide.

Fast forward to 2002 and the launch of the Jazz in the UK and within months that too sped into the best-sellers’ list.

So, when it came to replace the model the Japanese firm had a pretty clear idea of what was needed.

The car had been in the top five for UK retail sales – that’s sales to real people, not companies – for five years, so most important of all was not to mess with the successful original too much.

Just as importantly, 60 per cent of Jazz buyers are aged 56 to 75. In other words, these are buyers who have been around a bit, are not swayed by fads or fashion and know precisely what they want.

Hop inside the new Jazz and what hits you first is the amount of space available. The interior is clearly more spacious and versatile than before, the driving position is improved and visibility is first-class.

Just as importantly, the car gives a more comfortable, refined ride. All this ought to appeal to the increasing number of cost-conscious motorists and drivers looking to downsize.

The development team looked at the few areas where Jazz had come under criticism and improved them, so the ride is more supple and comfortable – particularly at the rear, and handling is more stable.

Lining up against the likes of powerful competition such as the Volkswagen Polo, Toyota Yaris, Ford Fiesta, Vauxhall Corsa and Mazda2, work has also been put in to make the cabin quieter and more comfortable.

The Jazz retains its clever ‘Magic Seats’ in the rear, which can be folded up with one hand to create a massive load space behind the front seats. The test car, a 1.4-litre model, also has the new ‘Double-Trunk’, which comprises of a flexible folding floor, under-floor storage well and cargo net. The clever part is how the floor folds to create either a multi-layered load space, or opens up to make use of the boot’s total volume.

Prices start at just under £10,000 for the entry-level 1.2-litre S, with a choice of petrol engines. The test model, in 100-horsepower ES specification, comes with 15-inch alloy wheels, air conditioning, the Double-Trunk boot, refrigerated glovebox and vehicle stability assist.

The top 1.4-litre EX grade adds cruise control, privacy glass, panoramic sunroof, 16-inch alloys and auto lights and wipers at just under £13,000.

Since its launch, more than two million Jazz – or Fit models as the car is sold in Japan – have been sold worldwide. Expect to see plenty more.

I BET you most car designers are men and that they are pretty well paid for their labours, writes Marie Duffy.

I also bet that very few of them actually own and drive the cars that they skilfully pen during the working day.

So when you get to drive the Honda Jazz, you are left with the unmistakable impression that whoever designed this car actually had to live with it.

When you see the Jazz whizzing past, you might mistakenly believe this is a small car. It is, on the outside, but step inside and explore and you find this nippy, manoeuvrable car is packed with surprises.

First, there is plenty of space for five people and the boot seems chunky and spacious. But both those spaces have a trick or two up their sleeve.

The rear seats fold flat to create a flat load area without having to remove the headrests, or fiddle with the front seats.

But even more ingeniously, the rear seats fold up, like cinema seats and lock into place with one simple push of a lever, to create a large carrying space behind the front seats.

Second, the boot is also cleverly designed. The test model had the so-called Double-Trunk with a flexible folding floor, under-floor storage well and cargo net. The floor can be ‘half-folded’ to make a two-tier shelving unit, creating a double load space. Heavier items can be stored below and lighter items can be placed on the upper shelf, which incorporates the hammock-type cargo net – perfect for holding fruit, wine or other items prone to rolling around. And a handy shopping bag hook is on the left-hand side of the luggage bay.

In total, there are no fewer than 10 small storage places spread around the cabin, and the test car also had a two-tier glovebox, refrigerated using a stream from the air conditioning unit,with pen and card holders in the upper section.

Finally, back in the driving seat, the Jazz is light to drive with an engine so quiet at tickover, you can mistakenly think it has stopped. To help squeeze as many miles to the gallon as possible, there is an up and down economy arrow displayed on the dashboard, advising you of the best point to change gear.

The Jazz is a real triumph of design delivering what everyone is looking for in these tough times – a combination of excellent economy, lower emissions and a smooth comfortable ride.

Auto facts Honda Jazz 1.4 ES 5dr

Price: £11,860

Insurance group: Five

Fuel consumption (Combined): 52.3mpg

Top speed: 113mph

Length: 169.5cm/153.5in

Width: 169.5cm/66.7in

Luggage capacity: 14 cu ft

Fuel tank capacity: 9.2 gallons/42 litres

CO2 emissions: 128g/km

Warranty: Three years/90,000 miles