We like
Interior space, on-road competence, build quality

Room for improvement
Choppy low-speed ride, average performance of 1.6-litre version

LIKE all Peugeots, the 306 deserves to be taken for an extended run, preferably on a road that offers undulating, sweeping bends and a few rough patches.

A simple five-minute drive around the block is not enough for prospective buyers to appreciate the car's true ability, nor its heritage.

Come 1997 and the arrival of well-considered revisions as well as a minor facelift for the 306, and Peugeot sensibly left the supple, class-leading suspension, steering and ride combination alone.

This car has been around since 1994 and there are still few small cars that can match it in this department. The 306 is simply one of the best handling and riding small cars around.

But where it wins on dynamics it is let down by niggling build and quality hassles, giving ground to the Japanese.

Even though the second-generation 306 goes some way to addressing these problems, they still persist and can be an impediment to long-term ownership.

The very quiet interior only serves to highlight the errant, occasional rattles in trim and squeaking noises in the front door window frames.

But these irritations can be forgiven when you punt the 306 on the open road.

It is here that the car's upgraded 16-valve, 1.8-litre engine - up from eight valves in the previous manual XT - and the improved transmission work harmoniously with the well controlled steering and handling.

In manual form, the twin camshaft, 1.8-litre engine actually likes to be revved and is far more responsive than the old eight- valve. Its mid-range response is significantly better.

The 16-valve produces its 84kW at 5500rpm with 158Nm of torque at 4250rpm.

But automatic buyers will have to soldier on with the eight-valve engine as the 16-valve version is not available in an automatic.

Although not big on outright acceleration, at least it is a very torquey unit. The eight-valve's near identical torque figure of 157Nm is produced at 3000rpm.

Annoyingly, the engine still requires premium unleaded. Dealers can reprogram the engines, at no cost, for regular unleaded but the price is a small drop in performance.

Peugeot spent $372 million for the 1997 upgrade of the 306, dropping in the new engines and stiffening the body significantly.

Both the front and rear ends were given a workover with wider headlights and a prominent lion grille giving the car a more purposeful stance.

The under-the-skin changes worked to make the body stronger, quieter and safer. Side-impact protection was also improved.

All major body panels were given thicker gauge steel which contributed to lower interior noise levels.

Significantly, the price remains the same but still at what is now considered the premium end of the small car market.

The range comprises the three-door Style, four-door XR sedan and four-door XT hatch.

For those wanting more bang for their bucks there is the 100kW, 2.0-litre XSi and the range-topping GTI 6 with a 124kW, 2.0- litre, twin cam engine mated to a six-speed gearbox. Both models feature beefier suspension and more kit.

Apart from the engine upgrades, standard equipment in the XT test car included an ingenious auto rain-sensing windscreen wiper system, height-adjustable headlights, heated exterior rear view mirrors, front and rear fog lights, four-spoke airbag steering wheel, tilt adjustable rear head restraints and additional cabin insulation. An engine immobiliser is standard across the range.

The switchgear has a more substantial feel to it and the previously fiddly electric window switches sit higher up on the front door trims.

The instrument cluster has a digital odometer with a maintenance indicator. The front and rear fog light switches are sensibly incorporated into the headlight/indicator stalk.

Peugeot could have improved the ventilation system which is still too limited in its output for Australian conditions. The vents also lack the degree of adjustment expected these days.

But the heating and ventilation generally work reasonably well with the optional climate control air-conditioning.

The new engines and other upgrades will get buyers into showrooms.

But they should then tackle a long, winding road in a 306. They will come back smiling and the dealer will have a sale.