THE pecking order in the hotly contested small-car segment has just been rearranged by a former icon of the ‘90s that, until now, has rested on its laurels.

The all-new, fifth-gen Subaru Impreza is good enough to scare the Volkswagen Golf and even Audi A3 Sportback, never mind the Mazda3, Toyota Corolla, Holden Astra and Ford Focus.

Based on a modular platform that is the Japanese company’s first all-new chassis since the original Liberty of 1989, the G5 Impreza hatch and sedan are so much better than their near-invisible predecessor that a name change would probably have been beneficial, because the neat and attractive styling is just too similar at first glance to convey the landmark leaps that have occurred beneath the skin.

At least the styling pops more in the flesh. In pictures the subtle curvature, signature angles and intense attention to details aren’t fully evident, but in the metal the sedan at least transitions from ‘Dullsville’ to ‘OK-burg’. This is quite a colour-dependent design too.

Inside is where all the oohs and aahs start, beginning with what is truly an incredibly well-packaged cabin in terms of shoulder space and especially rear seat legroom. This Impreza is quite vast in a glassy long and low sort of way, like you might imagine an AMC Pacer (from ‘Wayne’s World’) to be like.

At the local launch around Canberra’s at-times-challenging roads, Subaru had provided the 2.0i-L which is predicted to be the best-seller going toe-to-toe with the Mazda3 Maxx, and the 2.0i-S, that punches around the Mazda3 SP25 mark albeit with a smaller engine.

The base 2.0i was not on hand, so we can’t describe the ambience of its cabin complete with plastic steering wheel and no autonomous emergency braking.

However, what lay before us – even in the 2.0i-L – was the brand’s typical symmetrical styled interior with a much larger central touchscreen, improved graphics, lovely analogue instruments, an appealing leather-clad wheel, beautiful finishes, surprisingly classy, soft-feel materials, and sufficiently supportive seats offering heaps of adjustment.

You’ll find all the usual ventilation and storage attributes found in high quality Japanese small cars, except in a more contemporary, more vision friendly, and far roomier setting. Familiar and ergonomic yet still pretty fresh. We’d call that a win for the car and customers alike.

If we were to change anything, we’d probably go for a bolder dash design, because the Impreza’s is almost wilfully conservative, but otherwise the thought that’s gone into the fifth-gen interior is outstanding.

But if it’s an Impreza revolution you want then hit the start button.

Make no mistake, the “80 per cent revised” 115kW/196Nm 2.0-litre four-pot boxer engine is one of Subaru’s best naturally-aspirated units.

Revvy with an un-burstable fervour, it pairs particularly well to the also-revamped CVT for lively, consistent and quite muscular performance. A manual has not returned for the new-generation model which is a shame for true driving enthusiasts.

Self-serve-sadness aside, we reckon Subaru is right on the money coming to market with the seven-speed stepped ratio trickery engineered into this smooth and dependable powertrain.

If you’re keen to cruise around calmly, it behaves like an automotive injection of Valium, but if the devil’s on your shoulder the CVT behaves like a regular torque-converter auto, providing reasonably urgent change points to keep things propelling along.

The problem is though, we are becoming critics addicted to smaller-displacement turbo three and four-cylinders, so that thrilling forced-induction mid-range whoosh just isn’t in the Impreza’s repertoire.

Just 196Nm in a car that weighs the best part of 1450kg means lots of visits to the upper reaches of the rev range are in order, accompanied by an occasionally wailing CVT.

The turbo Euros like the brilliant Golf and Astra R have this aspect of the Suby beaten and, like most Europeans, the Impreza needs 95 RON premium unleaded as well.

But we’re going to cut Fuji Heavy Industries some slack here because nowhere on these cars does it say WRX, GT or even Si. Until a more performance-focused model comes along, it is simply 2.0i with an L, S, Premium or Luxury Premium.

But here is where the latest Impreza absolutely shines – the unimaginatively-dubbed ‘Subaru Global Platform’ (SGP) is a cracker.

Perfectly weighted, superbly linear, and very planted steering that reintroduces more than a modicum of feedback and feel back into the Impreza, is the first happy event.

Whether on the soft riding 17-inch-wheeled 2.0i-L sedan or 18-inch-clad sporty 2.0i-S hatch, the result is new-found agility, defined by relatively flat cornering and incredible grip.

In fact, the road-holding on both versions is so effective that we were negotiating tight mountain corner turns with confidence and pace that defies the ability of a car that does not trade primarily on performance credentials.

However, these basic ingredients auger especially well for a dynamically focused and supernaturally gifted WRX in the future.

As accomplished is the suspension that also does a great job cushioning posteriors with isolated, and supple ride quality that would be nothing short of alien to long-time Subaru drivers and passengers.

We broke ranks and drove on terribly uneven and cracked road surfaces, instead of the glass smooth ones Subaru had laid out for us, but the outcome was the same – silent and smooth progress all-round.

Brilliantly effective braking under adverse driving conditions is the third major advancement, underlining the towering competence of the SGP engineering.

The only fly in this dynamic love-fest ointment is that, under certain combinations of undesirable surfaces, the suspension can occasionally hit its bump stops quite hard. Thump.

More heard than felt, but it’s an issue that has apparently already been identified by Subaru’s engineers caused by a rubber compound that is too hard, so a softer one with more give is apparently coming very soon.

And consider this – it’s a cliché, but the chassis is so well sorted it is crying out for more power. We cannot wait until the downsized turbo boxers come on stream. Although Subaru is not yet reporting when that will happen.

So the latest Impreza is back in contention, representing a multi-generational type of jump to really shake up the order of things in the small-car class.

This is probably the Pleiades brand’s best and most complete Subaru since the halcyon days of the Mk3 Liberty of the late 1990s and early 2000s.

If you’re in the market for a small car under $30K, then Subaru’s latest should be on your to-test-drive list at your earliest convenience.