There’s a lot of talk about car downsizing. And with good cause. No sooner had I returned from the UK press launch of Kia’s new-look Picanto supermini, than a TV documentary was pointing out just how much it costs to run a vehicle these days.

Rising fuel prices, increases in premiums for insurance, road tax and higher parking charges are putting motorists under the cosh like never before. The TV people showed a shocked mum that the cost of running the family car was £5,560 a year.

Statistics like this have prompted car manufacturers to put increased focus on producing small, attractive cars with lower CO2 emissions (thereby saving on the road tax) and better fuel economy.

Get all three requirements right and you’re in business.

Kia has done just that with the new five-door Picanto, which it describes as “a small car grown up”.

More than that, when you compare it with its rivals – Toyota Aygo, Hyundai i10, Fiat Panda, Citroen C1, Chevrolet Spark and Renault Twingo – you might come to the same conclusion as me, that with the right engine choice this is the best car in its class.

Let’s take the design element first.

The new version is unrecognisable compared with the current model. That’s largely down to Peter Schreyer, a name you probably won’t be familiar with, but who was responsible for the look of Audi’s cars before he switched to Kia.

Under Mr Schreyer’s leadership, Kia has undergone nothing less than a design metamorphosis in recent years (just take a look at the new Sportage in comparison with the previous version).

Amazingly, the new Picanto is only 60mm longer than its predecessor, so that it still occupies slightly less than 3.6 metres of road space, but an increase of 15mm in wheelbase allied to some clever packaging ideas has resulted in significantly more cabin space.

Front legroom has increased by 36mm, for example, while luggage capacity is 27 per cent greater – although still quite restrictive at 200 litres – and all with no change in the height or width.

Then there’s the fuel consumption. If you think that 50mpg sounds good for a a 1.25-litre petrol engine, then think again. This second-generation Picanto will eke out an average 60mpg, while an EcoDynamics versions stretches that figure to 65.7mpg and the 1.0-litre version will squeeze out even more – a remarkable 67.3mpg.

The CO2 emissions figures are equally impressive: the 1.0-litre emits only 99g/km, which exempts it from tax, while the regular 1.25 manual (109g/km) is exempt from tax in the first year and liable for only £20 tax in the second year.

The 1.25 ISG version (100 g/km) is also exempt from tax, and the 1.25 auto (125g/km) attracts £90 tax in the second year.

So if the figures and the look are starting to tempt you, here’s the bit that should seal a lot of deals – it is a fun drive, especially with the bigger of the two engines.

The three-cylinder 1.0-litre unit develops 68bhp while the 1.25-litre four-cylinder version develops 84bhp, and it is this latter version that is the pick of the two if you intend more than city driving with only an occasional foray on to motorways and country lanes.

The bigger engine provides the confidence to overtake in situations where the smaller version might leave you wondering whether the car’s occasionally throaty engine is up to the task.

You need look no further than the acceleration figures to see why – the 1.0-litre travels from 0 to 60 mph in a quite pedestrian 13.9 seconds, whereas the 1.25-litre trims 2.9 seconds off that time.

However, the 1.0-litre version will surprise many with its ability to keep pace with traffic, hold its own at motorway speeds and tackle corners with the same gusto as the bigger-engined model.

A key feature in the enjoyment of the Picanto is the motor-driven power steering, which reduces the effort needed for parking and manoeuvring.

All versions have anti-lock brakes (ABS), electronic brake-force distribution (EBD) to apportion stopping effort to the wheels with most traction, and emergency brake assist system (BAS), which shows that Kia is not skimping on technology you might not expect to find in this sector.

The Picanto is going on sale in three trim levels, badged 1, 2 and 3. Standard features include a height-adjustable seat and a tilt-adjustable steering column.

Picanto 2 and 3 models have Bluetooth with voice activation and recognition, enabling hands-free mobile phone use, and while Picanto 2 comes with manual air conditioning, Picanto 3 has full automatic air conditioning.

Every model has front electric windows and Picanto 2 and 3 add rear electric windows. Automatic headlights with LED projection lamps and daytime running lights are fitted on Picanto 3.

So how much does all this cost. Prices start at a shade under £8,000 for the 1.0-litre model in base specification, which represents tremendous value. I suggest that if your wallet will stretch to it, you should opt for the 1.25-litre ISG in trim level 2 EcoDynamics. The addition of air-conditioning, better performance and almost equal economy figures are worth the extra £2,000. The top-spec 1.25-litre manual is priced at £11,195.

Later this year the five-door Picanto will be joined for the first time by a three-door version with a sportier look. In addition, a new version called 1 Air, which adds manual air conditioning to the existing 1 trim level specification for a £600 premium, will be added to the 1.0-litre engine line-up.

Kia Picanto

Model: 1.25-litre ISG (trim level 2).

Engine: Four-cylinder petrol, generating 84bhp.

Price: £10,195 (Picanto range from £7,995).

Transmission: Five-speed manual driving front wheels.

Performance: 0 to 60mph in 11.0 seconds; top speed 106mph.

Economy: 65.7mpg combined.

CO2 Rating: 100g/km.