Cheap, cheerful and a champion -- Fiat's new breed of Panda is set to chew a sizeable chunk out of the new supermini market.

Fiat Panda

Fiat has a 60-year pedigree in making city runabouts and its new offering arrives as small cars are recognised as the way forward, cutting hefty Government motor tax bills and generally kinder to the environment.

The combination of a high-quality vehicle and value for money has proved a real hit with private buyers, and a fair proportion of the two-and-a-half million or so new cars sold in Britain last year were superminis and city runabouts.

So the launch of the new Fiat Panda will undoubtedly mean a further swelling of small-car sales.

Recently voted European Car of the Year 2004, the Panda has gone on sale in six versions, priced from £6,295 to £8,095, embracing three trim levels: Active, Dynamic and Eleganza.

There's a choice of two economical petrol engines, a 1.1-litre eight-valve generating 54 horsepower, and 1.2-litre, also eight-valve, with a 60 horsepower output. Both power plants are mated to a five-speed manual gearbox, while Fiat's innovative, Dualogic gearbox with sequential or fully automatic operation is also available with the 1.2-litre engine.

On the road, both models proved nippy, quiet and comfortable, with a well-made solid feel.

Combine competitive pricing and rock-bottom insurance groups -- the 1.1-litre model is in group one -- and you have an ideal second car or budget buy.

The level of standard equipment is a sign of how the supermini segment has upped its act with every Panda coming with central locking, electric front windows, electronic power steering, two front airbags and a Blaupunkt stereo radio cassette. Options range from automatic climate control and parking sensors to steering wheel-mounted audio controls and a stereo CD with MP3 player.

On the base model there is a lot of plastic inside, which is softened by fabric as you move up the range.

Instrumentation and dashboard layout is first class and the difference between the two engines is hard to spot. With its compact exterior, the Panda combines the road presence and elevated driving position of a small sports utility vehicle with space and flexible practicality.

It is the first car in its class to offer up to six airbags, while front seatbelts with pre-tensioners and load limiters, three-point rear seatbelts, and anti-submarining seats, are all standard. Fiat is offering anti-lock brakes on all versions except the 1.1 Active.

Fiat's 1.3-litre, 16-valve, turbo diesel will join the Panda range this summer, and a 4x4 version, set to become the UK's most affordable off-roader, will follow nearer the end of the year.

Fiat UK managing director Massimo Toso said the arrival of the Panda and the launch of the new Idea compact people carrier in a month's time, would help transform Fiat's image.

He said: "We now have a very strong dealer network which I believe gives good service and is the best when it comes to supplying replacement parts. Anyone who goes into a Fiat dealership now will discover it is unrecognisable from just a short time ago."

Dealers have been concerned, said Mr Toso, with the company's well-publicised difficulties back home in Italy. He added: "But we have stuck together. We have lost only four dealers in the past 12 months and we hope to add another 20 in 2004 which will take the network up to 200.

"We have been struggling with our image for the past couple of years and now we must concentrate our efforts on getting people into our dealers so we can show them the quality of our cars."

Fiat has decided to save its TV marketing money for the new Idea, so while you will not see the Panda on your TV screens, they are likely to pop up at a zoo, or wildlife park, near you this summer.