Volkswagen Fox

Although our spies have recently spotted the Fox cold-weather testing, the car has actually been designed, developed and built in Brazil, where it goes on sale this month. Initially, three and five-door versions will be offered, but off-road and hot hatch editions are also on the drawing board. Our drive puts a five-door machine to the test.

Blending the space of a mini-MPV with a hatchback's compact looks, the Fox aims to answer criticisms of the Lupo's lack of practicality with a more accessible cabin and bigger boot. There is also a new rear-seat arrangement, where the entire bench can slide backwards by 15cm to make the most of the space available. Despite the promised low price, the car is well equipped, too. Even base versions have front and side airbags, ABS, EBD, power-steering and a fold-flat seat that expands the boot from 260 to 1,016 litres.

The UK engine choice for the three- door Fox is planned to include a trio of petrols and a diesel. Budget cars will offer a 53bhp 1.2-litre eight-valve motor and a 63bhp 1.2 16-valver. A new 74bhp 1.4 unit will come later. The diesel is a 60bhp 1.4-litre. The five-door model adds a 101bhp 1.6-litre eight-valve unit to the mix, as well as a 71bhp 1.0, destined for the cheap- est versions. We tested the 1.6-litre, which is likely to sell for ΂£7,500.

Based on the current-generation Polo, the Fox has spartan styling that betrays its low price. The only bold touch is the A-pillar, which sweeps down to meet the bonnet right over the front axle. As with the Seat Altea, this improves cabin space by set-ting a steep slope to the windscreen. The design was conceived to give a feeling that the Fox is a larger and lower-riding car than it really is. That said, the newcomer is 277mm longer, 1mm wider and 85mm taller than the outgoing Lupo, which feels cramped by comparison.

As in a mini MPV, you sit up high in the cabin. The commanding driving position offers a clear view of the road ahead, but you don't feel short on roof space. The seats adjust smoothly, and VW's typically fine fit and finish are impressive for a car of this price.

While the Fox may feel bigger than the Lupo, it is still nimble enough to make short work of city traffic. Although the centre of gravity is higher than that of its predecessor, the suspension is firm enough to guarantee sure-footed cornering. But this is also a small car that provides a comfort-able ride over longer journeys. The steering is relatively precise, too, and the short-ratio gears make the most of the engine's punchy character. However, there are a few niggles. For the first time in a VW, the headlight controls have been moved to the indicator stalk, making them more fiddly to operate. Cost-cutting has also seen the glove compartment replaced by a drawer under the driver's seat.

That said, interior practicality is still good. There are 18 cubbies scattered throughout the car, including bottle-holders in the door panels and secret floor-mounted compartments. However, to make the most of both the versatile interior and the punchy engine takes more effort than it would in the likes of traditional, more expensive rivals such as the Honda Jazz. That's the price you pay for a bargain-basement car.