What does GTI mean? Nobody knows for sure how a car that was devised by a group of Volkswagen engineers in their spare time and known as the “Sport Golf” got the name GTI. The suffix GT was already commonplace in 1975 but the “I”? Injection? The fastest version of the then new Golf hatchback was the first Volkswagen with fuel injection but the German for injection is einspritzung. So that’s not it. Perhaps it just sounded right.

The mysterious name heralded a new class of car — the hot hatchback. The success of its first GTI took Volkswagen by surprise. It intended to produce a special edition of just 5,000 cars but by the mid-1980s was making 5,000 a month. Other manufacturers showed no shame in copying the name for their faster models.

Inevitably, over nearly 30 years, the idea became devalued, not least by Volkswagen. The company’s bosses admit that recently the Golf GTI has become too tame. Time, they say, to put that straight: the new model, the fifth generation, returns to the spirit — if not the small size — of the original. It means business.

You sense that from the outset. This, the top performer in the new Golf range, looks and feels more special than its relatives. Its turbocharged 2 litre engine develops just under 200bhp, it has six gears, lowered suspension with 17in wheels and wide low-profile tyres, and the cosmetic touches to set it apart — a deep grille, twin exhaust pipes and red brake calipers showing through the alloy wheels, Porsche-style.

The new, more potent Golf GTI is not without competition. There is now a Vauxhall Astra SRi Turbo with 200bhp, a Honda Civic Type-R developing 197, a Renaultsport Mégane with 222, and the Alfa 147 GTA with 250bhp.

Of these new hot hatches, the Golf GTI is the best. It is fast — dashing from 0-62mph in 6.9sec and reaching 145mph — and foolproof, with very high levels of cornering grip and ESP electronic stability control to save embarrassment when they are exhausted. I am qualified to say this because I drove it on streaming wet roads in France and on the similarly drenched test track at Le Castellet.

Only a few weeks before I drove a regular Golf on a racing circuit and was disappointed; the electric power steering that is fine on the road felt dull when taken to extremes. Not so the GTI, which was sharp and nimble.

The fuel-injection engine is smooth and punchy and with the throttle hard down produces an exhaust note that can only be described as fruity. The turbocharging is so well arranged that there is no noticeable “step” in performance as it starts to do its work. Sweet and obedient, the engine is fast when you want to be, relaxing when you don’t.

There is a choice of six-speed manual gearbox or DSG, Volkswagen’s automated manual transmission. DSG costs £1,325 extra but is terrific. Set to automatic mode, it is as smooth as most normal automatic transmissions but has none of their power and performance losses. Alternatively, sequential gearchanges using the lever or two small paddles behind the steering-wheel spokes make you feel like a racing driver. That is also the idea of the flat-bottomed steering wheel but I would have preferred a round one when twirling from lock to lock through the twisty hillsides of Provence.

Volkswagen was determined to bring the new Golf GTI in at less than £20,000, so the three-door is £19,995. That’s still expensive compared with most of its rivals. And while the sporting essentials are included in the standard price, it is easy to spend more. Two extra doors (the five-door will be the most popular version) add £500, leather upholstery to replace the standard tartan cloth is a hefty £1,795. The first deliveries to Britain will be in January.

Whatever it meant to begin with at Volkswagen, GTI today stands for a quick hatchback with great capability and surprising refinement. Today’s buyer is likely to be older than his counterpart of the 1970s and demand something more rounded and sophisticated than simply a warmed-up version of a small family car. Once, Volkswagen didn’t appreciate that enough but now it has learnt — and learnt well.