Ever since the first sporting cars were produced more than a century ago, there has existed a perception that fun is directly proportional to power and price. But then, just occasionally, a car like this Fiat Panda 100HP comes along and turns that on its head.

It costs less than £10,000 and, as its name suggests, has just 100bhp, yet I spent a few days bowling about southeast Wales in one and can name any number of allegedly sporting cars with more than twice the power and price that would have been less than half as much fun.

This car represents Fiat at its brilliant best. Indeed, it seems to me that, for this embattled marque at least, the relationship between power, price and fun is inversely proportional. Even a basic Panda is clearly conceived and smartly executed, but by the time you work your way up through the model ranges and reach the heady heights of the Croma, you start to wonder if you wouldn’t really be better off on the bus.

None of this should surprise you. Despite its insistence on building large and undesirable cars, Fiat is actually in its element when building cars like this. Its genius for small car construction can be traced back before the war to the original Topolino. The Nuova 500 that replaced it was a cleverer, cuter piece of design than the original Mini and even the more modern Pandas and Cinquecentos have been charming and effective.

The Panda 100HP is all this and more. Fiat has figured out that even a 100bhp engine will still provide decent performance if installed in a car weighing less than a ton. True, few people are likely to get overexcited by a 0-62mph time of 9.5sec and a top speed of 115mph, but if that were all there is to this tale, you’d never be reading about it here.

Its real magic lies elsewhere. For a start it looks terrific with its pugnacious stance on its fat alloy wheels, pushed-out wheelarches and chunky front and rear bumpers. The cabin looks funky and if you look down at the gearlever, you’ll find it has six forward speeds — in a car costing £9,995. What you won’t be able to see is that the suspension has been reworked to make the car feel like no Panda before and that the brakes have been uprated to cope.

The result is a car that may not be quick on paper but, out on the road where it matters, is startlingly rapid point to point. On a certain sort of narrow B-road, its diminutive dimensions mean you can travel at speeds you’d not hope to match in a Bugatti Veyron. Because it is light it not only has absurd levels of grip, it is also extremely agile, changing direction like an escaping POW dodging machinegun fire.

Best of all, because it is small, noisy and endlessly enthusiastic, it also conspires to feel much faster than it is, making it a car that can be enjoyed to the full without putting your licence on the line. I absolutely loved it.

Whether I could live with it is another matter. The driving position for a tall driver like me is pretty dreadful — you feel perched on the car with the steering wheel uncomfortably far away — there’s precious little room in the back or boot and long journeys are inevitably compromised by high noise levels in the cabin and the rollerskate ride.

But these cars will be bought by the young, and the young don’t even know what ride and refinement are and won’t be in the least bit bothered by their absence.

Yet this is not the Fiat I’m most excited about. True to the Fiat form book, the one I’m really looking forward to is even smaller, cheaper and less powerful than this. Later this year Fiat will launch its new 500, a direct descendant of the Topolino. In concept form it looks beautiful — true to, but not tied to, its roots — and easy even now to visualise in the crowded piazzas of Milan and Turin.

If it’s as good to drive as it is to look at, it could be a landmark in small car design. We’ll know for sure in September.

VITAL STATISTICS

Model Fiat Panda 100HP
Engine type 1368cc, four cylinders
Power/torque100bhp @ 6000rpm / 97 lb ft @ 4250rpm
Transmission Six-speed manual
Fuel/CO2 43.5mpg (combined cycle) / 154g/km
Performance 0-62mph: 9.5sec / Top speed: 115mph
Price £9,995
Verdict Small, fast and fun, exactly what all Fiats should be
Rating 4/5
Date of release Out now

THE OPPOSITION

Model Citroën C2 1.6i VTR £11,445
For Good looking, quite good to drive
Against Getting old, build quality not the best

Model Ford SportKa SE £9,995
For Terrific fun to drive, good performance
Against Cheap-looking cabin, interior noise levels