The Peugeot 208 is far, far better than the 207 it replaces - and the 206 before that, come to think of it. Sorry, no keeping you on tenterhooks in this First Drive. This improvement was never going to be difficult to achieve - so long as Peugeot didn't make it out of blancmange, the 208 was bound to be vastly superior to its ancestors.

It's difficult to overstate the importance of Peugeot getting this car right. Thanks to pressure from the ever-improving Korean manufacturers, and those tepid predecessors, the 208 needs to deliver. It's not being dramatic to say that the future of Peugeot depends on it.

Fortunately, though, the French are on a roll at the moment. Quality is their new watchword. There are classy design touches everywhere on the 208, which, as any engineer will tell you, are expensive to build into a mass-produced car. Take the chrome flourish flicking out of the rear window. Or the shape of the windscreen where it meets the roof. Simple, and yet they add considerable perceived value.

The interior materials are posher as well. Sure, there are still hard plastics in less obvious places, but that's no different to any rival. And in the 208, all models bar the base Access get the nifty touchscreen as standard, which has transformed the interior. No more cluttered dash - instead, the Pug has an upmarket feel to it. That screen controls everything from your iPod to the satnav - it's intuitive to use and immediately makes rivals feel a bit, well, 20th-century.

There's a wide range of engines - from a new 1.0-litre, three-cylinder petrol to the refined and punchy 1.6 e-HDi diesel tested here - via all the usual diesels and petrols in between. The focus has been on economy and emissions, so most emit under 100g/km of CO2. Our 1.6 e-HDi coughs out 99g/km and returns a claimed 74.3mpg - impressive for a car with 113bhp and 210lb ft.

The 208's weight-loss programme will have helped this. It has shed 110kg over the 207, so the Pug feels much more agile now - an impression aided by the tiny, sporty steering wheel.

The ride also felt good (at least on French roads), settling quickly after longer undulations and rolling over big bumps at low speeds. In short, it's impressively well-damped, helping to give the 208 a big-car feel. A ‘but' is needed, though. It's no Fiesta-beater from a handling point of view, as the steering is totally numb in your hands. Precise, but devoid of all feel.

Not that this really matters for most 208 customers - they're more likely to appreciate the economy and refinement, the step up in quality and design. Would we still have a Fiesta over it? Probably, but the fact that we're even mentioning the two cars in the same sentence speaks volumesabout how much of a game-changer the 208 is. Peugeot's renaissance continues.