Every so often a new car appears that makes you realise all the other contenders have been getting it wrong for years, and one such car was the original Honda Jazz.

Launched in 2002, it was a little car with an implausibly spacious interior, ultra-frugal engines, unrivalled build quality and nimble handling, and it set a standard the rest have spent the past six years trying (and failing) to meet.

In that time it has won more than 30 awards, has been ranked number one in its category in the JD Power customer satisfaction survey since 2004, has the highest residual values of any car in its class and has been in the top three bestselling cars in its sector for the past four years. Some act to follow, then.

The question is this: is Honda about to replace a world-beater with a less attractive product, as it just has with the Accord saloon? Or will the new Jazz leave its rivals hanging their heads in shame?

Looking at the new Jazz, its styling is similar to its predecessor but a touch blander. In a world in which customers are more keen than ever to stand out from the crowd, and in a class where there are so many good-looking cars, it’s a curious approach to take.

But delve a little deeper and you’ll find Honda has improved on the original product. The car is fractionally bigger in every significant dimension, has two new engines and carries over just 6% of the components of its forerunner. It still sites its fuel tank under the front seats to provide class-busting interior space, and is still built to a standard we’re not used to seeing in this kind of car. And it still comes in a range of happy colours (not counting the pink hue in which Honda painted an original Jazz for the benefit of one discerning owner by the name of Shirley Clarkson — mother of Jeremy).

Interestingly, Honda has seen fit to keep the two self-imposed limitations without which sales would have been stronger still: there is still no three-door version, and diesel engines continue to be omitted. Now, as then, there is a five-door body and a 1.2 or 1.4 litre petrol engine, and that’s your lot.

But the 1.4 litre engine I tried is transformed for the better. Power rises from an adequate 83bhp to a very competitive 99bhp, yet fuel consumption improves from 48.7mpg to 53.3mpg, while emissions fall from 137g/km to 123g/km. If buyers choose the six-speed automatic option, they drop down to 120g/km, putting the car in band B for road tax and reducing the annual cost of the disc from £120 to just £35.

Out on the road you really feel the extra performance. Unlike almost all new cars, the changes to the Jazz have barely affected its waistline. Just 33lb extra and the increase in power allows it to knock 1.5sec off the old car’s 0-62mph time — down to 11.8sec — and raise top speed from 106mph to 113mph. The new engine is smooth and eager, but most noticeable of all is the car’s exceptional refinement. Even at a high-speed cruise, this is an uncommonly quiet small hatchback, proving that Honda has addressed one of the two serious problems afflicting the original Jazz.

The other — a distinct lack of ride comfort — it has tackled with less success. It still fidgets its way along our back roads, interfering with one’s enjoyment of otherwise pleasant and engaging handling.

If you can put up with that, however, there’s little else to fault. The cabin is yet more spacious, and there’s a huge boot complete with under-floor storage, plus seats that fold completely flat at the pull of a handle. Honda doesn’t want you to think of the Jazz as a mini-MPV, because that pigeonholes it in a small corner of the market — but I even found 10 different places to put your cappuccino.

Yes, it’s less impressive in 2008 than was its parent in 2002, but that was revolution and this is evolution. What matters more is that it builds further on the Jazz’s enduring strengths, solves one of its two most serious problems and loses none of its considerable charm and easy-going nature. And while prices between £10,000 and £14,000 represent an increase over the outgoing models, this is more than explained away by its improved specification.

Make no mistake: but for one small thing, the Jazz would arrive in UK showrooms next month at the top of its class. That small thing is called the new Ford Fiesta, which rather inconveniently goes on sale at the same time. Which is better? It’s difficult to say at this early stage, but my strong suspicion is that while the heart would scream “Fiesta” for its superior driving dynamics, the head would calmly insist upon the more practical Jazz. Fact is, it’s hard to see how you could lose with either.

Honda Jazz

ENGINE1339cc, four cylinders

POWER99bhp @ 6000rpm

TORQUE94 lb ft @ 4800rpm

TRANSMISSION Five-speed manual

FUEL / CO253.3mpg / 124g/km

ACCELERATION 0-62mph: 11.8sec

TOP SPEED 113mph

PRICE £11,490

TAX BAND C (£120 for a year)

RELEASE DATE October 17

VERDICT Once more the one to beat