VOLKSWAGEN'S diminutive Polo is smaller than today's Golf but about the same size as the 1970s original.

The Polo has been the Barina of the VW range in Europe for 25 years. It arrived in Australia in October, 1996.

The current third generation model was a revelation when unveiled abroad in 1994, introducing new levels of driveability, safety and refinement for a light car.

Perhaps this is why VW priced the Polo against larger cars in the next segment up, such as the Holden Astra and Mazda Astina.

VW pushes the Polo's German heritage and savvy design to win over status-seeking city-living buyers.

It also packs the Polo with big-car features like dual airbags, power windows, a CD player and rear head rests.

No other five-door light car has a bigger engine. Its 55kW, single cam, 1.6-litre engine is a torquey unit that capitalises on the car's low weight (920kg) for lively performance.

But the Polo is no paragon of efficiency. The twin cam Pulsar 1.6, for instance, develops 86kW and, unlike the VW, does not require expensive premium unleaded.

Nevertheless, the engine's strength is its low-down torque of 128Nm from an accessible 2800rpm to 3400rpm, ideal for city and suburban driving.

Where most light cars have you grabbing a lower gear to maintain a decent pace, the Polo will happily pull in a higher ratio, making it a more relaxed driving experience.

The gear change and clutch are light and the driver's footrest is welcome.

Yet the driver-adaptive four-speed automatic suits the engine even better.

Drive it hard and the low change-up points propel the Polo with great alacrity. You just point and squirt.

Low fuel consumption and high refinement levels also impress. Only on the open road does the engine's meagre size and power output show. Care is required when overtaking. Still, good aerodynamics and high refinement levels translate into low-fatigue highway cruising.

The Polo also offers a class-leading ride, its suspension tuned to be soft enough to soak up even big bumps.

But sloppy body control is the price. The Polo is roly-poly around corners, leaning heavily on its soft springs. It lacks fluency and poise, despite a quick steering rack that provides quite nippy handling around town.

The tall body allows rear passengers to sit comfortably upright. Legroom is tight but bearable while headroom is generous.

Front passengers fare better with the big, firm and multi- adjustable seats and a steering column offering support and comfort, especially after a long spell.

The cabin is well presented with clear and classy instrumentation, high quality plastics, lively but restrained fabrics and stylishly integrated door trim.

The passenger airbag ousts the glovebox so VW offers a shallow item hidden below the steering column. The deep door pockets are far more useable.

Boot space, facilitated by a split/fold rear seat, is short but extremely deep, thanks to a tiny space-saver spare tyre.

This VW has proven to be dependable. But the fiddly CD player skips, has poor sound and radio reception, and rattles. Some spare parts are expensive and the front brake pads wear quickly.