The letter “i” has great significance in the motoring world. It first came to prominence as a boot-lid indicator that the engine of the car in front had fuel injection. A couple of decades ago, company reps were said to be particularly proud of this bit of oneupman-ship because some considered that it also stood for “important”.

Now the “i” is being given increasing prominence by Hyundai as the company introduces efficient new models with the letter as part of the names of its models. The latest is the i10.

This time the letter stands for “impressive” and “innovative”, Hyundai says – and, of course, it reflects the final letter of the company’s name.

The i10 is every inch – and there are 140½ of them – a city car, a wheel-at-each-corner design having short overhangs, excellent vision and nimble handling where room for manoeuvre is tight. At £6,495 the basic Classic version represents potentially good value and even in standard form gets air conditioning, four airbags, a six-speaker in-car entertainment system including MP3 compatible CD player. Electric front windows and central locking are also standard.

City cars generally have truncated bodyshells and sit on small wheels. The Hyundai is no exception. Fit and finish quality is excellent for a car in this price bracket.

At present there is no engine choice and the i10 comes with a 1.1litre 65bhp petrol unit and a five-speed manual gearbox as standard or optional four-speed automatic. With two people on board, it has to be worked hard to achieve reasonable performance and momentum is quickly lost on hills, even with the accelerator pedal pressed to the floor. Gear-change quality is good, which helps the driver to make the most of what power there is, but the engine is noisy when revved hard. This lack of enthusiasm dulls the car.

A diesel is available in some markets, but Hyundai does not offer it in the UK because it feels that it would make the car too expensive.

The i10 handles and rides well for its size and benefits from a long wheelbase in relation to overall length. Steering is sharp and quick in town. The little Hyundai’s driving position is excellent even for tall folk and the controls are well positioned. Exterior mirrors are manually operated, which is normal for cars in this sector but a nuisance.

The cabin is spacious for such a small car and, even at 6ft 1in, I could sit in the back without any need for contortions. At 258 litres, boot space is adequate and, significantly, the rear seats are divided and folding to add more luggage room.

Low running costs are essential for a car such as the i10. Combined fuel consumption is 56.5mpg – which is positively diesel-like – and with a CO2 output of 119g/km, annual road tax is only £35. It may not seem to be a typical company car, but for those who just want city wheels, a little car makes a lot of sense.

Hyundai explains that company car drivers are liable for only 10 per cent benefit-in-kind liability for the 2008-09 tax year. “They could pay less than £13 a month to the Inland Revenue,” Hyundai says. Another big financial plus is the car’s five-year warranty.

The i10 comes in three trim levels: Classic, Comfort and Style. Because the Classic version is well equipped, it is going to be fine for most people. The Comfort (£7,095) adds remote central locking, height-adjustable driver’s seat, an underfloor luggage box, intermittent rear wiper and electric rear windows. The Style (£7,595) has all that plus 15-inch alloy wheels, heated front seats, improved trim and an excellent powered sunroof – but by this stage in the i10 climb towards poshness, the price has risen by £1,400. That is arguably still good value, though.

But the car really needs a slightly bigger engine. A 75bhp 1.2litre, still with an excellent CO2 figure of 120g/ km, will be available by the end of the year. Combined fuel consumption should not suffer because the engine would not have to be worked so hard.

Hyundai expects to sell about 10,000 i10s a year – rather more than one in the “i” for the opposition, then.

Specification

Car Hyundai i10 Classic

Engine1.1litre 65bhp petrol

Transmission Five-speed manual (four-speed automatic optional)

Performance 0-62mph in 15.6 seconds, top speed 95mph

Fuel consumption 56.5mpg (combined)

CO2 emissions 119g/km

Price £6,495

On sale April

Alternatives

Fiat Panda Delightful, practical, comfortable, quirky looks

Citroën C1/Toyota Aygo/ Peugeot 107 Closely related trio (built in same factory) that are economical and nippy, but noisy

Ford Ka It may be old, but it is more than willing and still good to drive, but with only three doors is limited on versatility