IN THE 1950s, a new Holden was big news – so big, in fact, that models such as the 1956 FE made the front page of virtually every newspaper in Australia.

Back then ‘the’ Holden (one size, two versions, in four shapes – sedan, ute, panel van and “... exciting new station sedan for ’57!”) commanded around 50 per cent of the new-car market, and waiting lists were as long as a pub’s opening hours were short.

It was about this time that Japan was starting to think about exporting vehicles – firstly to Australia as a test run and then – if successful – to the rest of the world.

Fast-forward half a century and it is Toyota that leads, controlling around 22 per cent of the new-car market, and dominating in many segments – and none so emphatically as in the small-car class with its venerable Corolla.

Unveiled in 1966 and released in Australia during 1967, the Corolla is now a favourite with private buyers, and has occasionally outsold the Holden Commodore in the past year to be the country's number-one seller.

That car, the 120 series, was the ninth-generation car to wear the Corolla nameplate.

It was reliable, sprightly, economical and very well-built, but also fairly noisy, a little unresolved in its handling and ride characteristics, increasingly uncompetitive in its equipment listing and rather invisible to look at.

Imagine, then, if Toyota got serious about really improving the Corolla.

The 150 series is it the world’s largest car-maker’s big tilt at making a small-car leader.

Overseen by one chief engineer, the development was split into two – Europe for the hatchback and Japan for the more-conservative sedan.

The latter first: as a sedan, the Corolla works because it is relatively spacious, very quiet on normal road surfaces, and extremely refined.

It looks like a shrunken Camry from the outside and isn’t too far from feeling like a small Lexus inside, particularly in the top-line Ultima sedan guise sampled.

Some rivals – notably the Volkswagen Jetta and Honda Civic – offer more speeds with their automatic gearboxes, but the Corolla does not seem to suffer from it.

The completely new and impressively efficient 1.8-litre four-cylinder engine loves to rev, has plenty of pick-up in the lower rev range, and is far sweeter in operation than any previous Corolla unit.

We could not really fault the dynamics, either – the Ultima sedan rides well, while the steering is surprisingly firmly weighted and direct, making us wonder how sharp future sportier versions of the Corolla might be.

But let’s not get too carried away, because the sedan does lean through corners and is not really a mountain road blaster.

Meanwhile, the Corolla hatch is a revelation.

No, it does not ride, steer and handle like the Ford Focus or Volkswagen Golf. The Holden Astra is also sharper and more-firmly tied down.

Yet the Corolla hatch finally feels like it is playing in the same ballpark as the Europeans, backed up by the same impressive steering responses as the sedan’s, as well as the similarly comfortable and quiet ride.

You can drive the hatch hard and be rewarded with a high degree of cornering prowess, along with roadholding that seems as safe and secure as any small car at this price level – all-wheel drives aside – is likely to be.

In short, there is more fun to be had.

And, while some people might say that the Corolla hatch looks like a Yaris that is pregnant with quintuplets, there is no denying how funky the interior – now roomier than before – really is.

The elevated centre console that absolutely dominates the hatchback’s cabin works well, resulting in a more natural positioning of the gearlever, while imbuing a modern and individual aesthetic to a car that looks a million times better inside than it predecessor did.

There was a moment during a spell at the wheel of the well-specified six-speed manual Conquest hatch that the Corolla seemed brilliant. Sitting in that stylish cabin, speeding along a smooth curvy road, a great song on the radio, the car and driver gelled.

However, four almost-identical previous-model Corollas coming the other way in quick succession burst that particular bubble, and it dawned that this car’s sheer commonness will soon erode much of the newcomer’s freshness.

And that is precisely the point of the Corolla. Soon Toyota will be selling over 50,000 every year in Australia alone, and they will be everywhere.

So, while it is not really a car to get excited about, the fact that the latest version is a very good little car indeed makes the Corolla front-page news for many new-car buyers out there.