EVEN though the world is going SUV-mad, there’s still a place – and a solid market – for small and medium cars.

Even though the SUV sector’s growth rate is outstripping everything else being made at the moment, light and small cars still make up more than 30 per cent of all new passenger car sales this year.

Peugeot is counting on this fact, looking at both the 208 and the larger 308 to help it weather the lull between new SUVs in its line-up. As a result, much work has been done to align the two from a grade point of view, and the 208 – first released locally in 2012 – is the big beneficiary.

Through the revised model grades runs one constant: Peugeot’s e-THP 1.2-litre three-cylinder turbocharged petrol engine making 81kW and 205Nm when mated with the Aisin-developed six-speed auto.

This Euro 6-compatible motor does duty in various trims and power levels across the PSA Peugeot Citroen group, and in this guise returns a very reasonable fuel consumption figure of 4.5 litres per 100 kilometres.

It’s not meant to be a sports machine, reeling off the 0-100km/h dash in a leisurely 10.9 seconds and on to a top speed of 190km/h.

In use, though, it’s a very refined, torquey and characterful engine, with urge from down low in city situations and the ability to sit on the national speed limit with no dramas at all.

The six-speeder is a vast improvement over the old four-speed unit, though the chase for economy sees the transmission race for its highest cogs as soon as the opportunity presents itself. It takes but a moment for it to drop a cog or two when directed, however, and a small Sports mode button on the shift selector tunnel gives the driver more rpm in each cog if so required.

The 208’s chassis was a welcome return to form for a company renowned for small-hatch handling, and the facelifted car doesn’t stray from the formula.

Its sophisticated feel gives the 1070kg 208 the ride and handling attributes of something a division higher, with great damper control, just the right amount of roll and a cosseting ride even on coarse-chip surfaces.

Noise intrusion is well restrained for such a small car, and there is plenty of room aboard for tall adults up front. There’s sufficient headroom for them in the back, but restricted legroom means the rear seat is a short-trip proposition only for taller passengers. You can jam 311 litres of stuff behind the seats.

GoAuto had the chance to sample the $25,990 (plus ORCs) Allure for a two-day period, and its combination of modern conveniences – including satellite navigation, leather seats, centre console bin and auto lights and wipers – and a small footprint make for a stylish, attractive little town car with no real vices.

Its interior is beautifully styled and well considered, with clear instrumentation and minimalist switchgear, while the seats themselves are comfortable and well apportioned, even for larger, taller drivers.

Some will raise their eyebrows at the tiny steering wheel/over-top dash arrangement, while others will wince a little at the high price for the upper-reach models, including the manual-only 1.6-litre GTi at $30,990 in manual-only guise.

The base model Access, too, has really felt the slash of the accountant’s red pen, offering rear window manual winders and even manually adjustable rearvision mirrors.

With the current broad range of cars on offer, though, the 208 will appeal to Europhiles, unique seekers and value hunters alike. Peugeot might be aiming the 208 a bit further down the order, but it’s not straying far from the path of middling premium that has always characterised the brand.

It’s also one of the best small cars in the category when it comes to ride, handling, power output and visual appeal.

Only time will tell if the new lower price brings the punters in, but the 208 definitely deserves to succeed.