Peugeot 208 review - Telegraph Sit inside and you are at once surprised and amazed. Amazed because of the level of quality and design integrity, and also the space - the 208 is smaller outside than a 207, but bigger inside. There's ample space in the front (although the pedals are very close together), the boot is also bigger and rear passengers get more leg room, although you still fit where you touch in the back. The surprise comes from the tiny steering wheel which, when adjusted as you want, obscures the instrument cluster. This is part of Peugeot's "regeneration" in ergonomics, a statement which should be treated with all the suspicion of a fashion designer announcing he's "reinvented" trousers. According to Alain Tranzer, the project head, the idea for the small steering wheel came first, then they had to get the instruments on top of it so they weren't obscured. "We are very pleased with the result," he says. We have found better driving pleasure and in our customer tests, young or old, women or men, or different nationalities, didn't have a problem. Well I did, and Peugeot tacitly acknowledges that this wheel-in-your-lap driving position is a Marmite proposition. "It's OK to have 20 per cent of people who don't like this car," says Vincent Rambaud, the director general of Automobiles Peugeot, "as long as the other 80 per cent love it." On the road, the 1.2 packs a surprisingly big punch. This is in part because of the massive diet foisted on the 208, shaving 242lb off the 207 as well as exchanging the beak-based pedestrian impact protection for a more thoughtful smaller nose and crash technology. At lower engine speeds the balance shaft doesn't prevent a surge of three-cylinder vibration through the steering wheel, pedals and gear lever, though the torque is still impressive. However, you wouldn't want to trade down to the 1.0-litre version, which is a hair shirt. That weight reduction has a positive effect on every aspect of the ride and handling. While the MacPherson-strut front, twist-beam rear suspension is lifted largely from the 207, it has better bushes, dual-rate springs and dampers that react differently to fast and slow wheel movements. There's new-found chassis balance, which results in a big grin factor in the corners, while excellent suspension compliance means you aren't rattled by road ripples or potholes. Eventually you become accustomed to the weird driving position, but it never feels entirely natural. Electrically assisted steering is a vast improvement, too. It's accurate and fast, but there's still stickiness around the centre position and the weighting feels wholly artificial, without an iota of feedback. With all-round discs on all but the 0.96-ton three-cylinder cars, the braking feels strong and linear, but the drums on our test car grabbed over bumps. In creating the best-looking car in its class, Peugeot has included high-quality interiors, a terrific range of engines and what look like keen prices. The 208 is 30 per cent cheaper to build and 30 per cent cheaper to engineer, so the cost accountants will be pretty pleased as well. Just a pity about that driving position. Peugeot 208 Tested: 1,199cc, three-cylinder petrol with six-speed manual transmission, front-wheel drive Price/on sale: About £12,100 (range £9,995 to about £17,000) /June 28 Power/torque: 81bhp @ 6,000rpm/87lb ft @ 2,750rpm Top speed: 108mph Acceleration: 0-62mph in 12.2sec Fuel economy: 51.4mpg EU Urban (62.7mpg Combined) CO2 emissions: 104g/km VED band: B (zero first year, £95 thereafter) Verdict: Very handsome, especially the three-door. Base models feel cheap and some models need more gears. More than respectable ride and handling thanks to weight savings Renault Clio, from £8,800 Launched in 2006, in this company the Clio feels old enough to be priced in francs. It's still competitive on price and engine choice and the handling is sharp. The 1.5dCi diesel versions are best. Ford Fiesta, from £9,495 Cheaper inside and not as classy to look at, but the Ford still takes the crown for agility and feedback. Its conventional driving position is better although the engine range is very similar. Kia Rio, from £9,995 Better than its predecessor by several orders of magnitude. Good style and space, ride and handling not bad, but let down by steering. A seven-year warranty, but Kia's price advantage has evaporated.