Sometimes, at the end of a particularly enthralling journey, I’ll turn off the engine and sit there, rerunning the past few hours in my head. While memory is fresh it’s almost like driving the road again. I can smell the hot tyres and brakes and hear the tick of contracting metal as the car’s body cools. When I have these moments I’m usually in a Ferrari, Lamborghini or something else quick, expensive and exotic. But this time I was in a £16,000 Renault shopping car.

Quite the worst thing about this car is its name, which, if I’ve read the press pack correctly, is Renault New Clio 2.0 Renaultsport 197. The rest of it is almost unrelentingly brilliant.

Anyone who has driven the standard Clio will scarcely believe that such a worthy but dull vehicle has been turned into the best small hot hatch since the Peugeot 205 GTi was launched more than 20 years ago. Then again, they will not know the lengths Renault has gone to to give its new cub the bite of a sabre-tooth tiger.

It starts with an engine that produces 197bhp from just 2 litres and without the aid of a turbocharger. Renault says it will get the Clio to 62mph in 6.9sec but it feels even faster than that. With six ultra-close gear ratios working with the engine’s hunger for revs, its performance is utterly addictive.

But that’s just the start. To understand just how serious Renault is, consider that not only are the brakes bigger than those of a Porsche Cayman but the wheelbase has been extended to ensure it handles properly. Add to this a suspension that has nothing save its basic architecture in common with that of any other Clio and the message is loud and clear: Renault is done with cars that merely look the part. However good this Clio looks with its big wheels, pumped-out arches and side skirts, it is nothing compared with how it goes.

If you think the moulded plastic slats at the back are there merely to look like the air diffusers on racing cars, think again. They cut aerodynamic lift at the rear of the car by a factor of three. At race-track speeds they create 70kg of downforce to help keep the car on the tarmac. Even the exhausts have been truncated to keep out of the way of the air flow.

What does this feel like inside? At first it feels like a car with an inexhaustible supply of grip. Arrive at a corner at anything approaching a sane speed, turn the wheel and it acquires its new co-ordinates with the speed and accuracy of a target-locked missile. Go beyond these limits and you find you have to be pushing ridiculously hard to wake up the stability control systems. Try harder still and you find that it will let you adjust your line through a corner by gently lifting or depressing the accelerator, just like the 205 GTi did all those years ago. If you messed too hard with a GTi it would spit you off the track — I know, I did it — but the Clio will tolerate all sorts of abuse without snapping back.

Perhaps what is most unexpected is that it manages all of the above while remaining a civilised and practical road car. Despite its thick sports seats there is more than enough room in the back for children, the boot is unusually capacious for the class, and over the 500 miles I drove it returned more than 29mpg, which is not bad for a petrol-powered car with nearly 200bhp.

I’d change just two things: the seats that gave me backache and the noisy engine at motorway speeds. The latter could be solved by fitting a taller sixth-gear ratio, which would also improve economy without blunting the car’s performance.

How good is this car? Well, if I had £16,000 and needed a car good at all things in general and keeping me amused as a driver in particular, I would already have paid my deposit to the nearest Renault dealer. Indeed, I’m not sure that even if I could afford the extra £1,500 for a basic Ford Focus ST I’d bother, even though the Ford is undoubtedly a fine car and a bargain to boot.

What you are looking at is the best affordable driver’s small hatch we have seen in at least the past decade. Its predecessor, the Clio 182, was fun but tinny and uncivilised. The achievement here is to combine such extraordinary driving dynamics in a car that can be used every day. It’s been in the showrooms for less than a fortnight but its place in history is assured.

THE OPPOSITION

Model Ford Focus ST £17,520
For Great performance, price, fluent handling
Against Rather thirsty, looks garish

Model Mini Cooper S £15,520
For Good fun to drive, great image and residual values
Against Cramped, getting old and soon to be replaced