Driving
Flexible performance marks out the baby Fiat. The 1.2-litre engine is preferable, with good low-down torque and a responsive, unstrained feel. A slick gearchange and sharp throttle mean it's a perfect city companion - but it's impressive out of town too. It's admirably stable at speed and feels quite at home on the motorway. But B-road ability is equally good. There is some body roll in corners but weight transfer is never dramatic. In fact, the handling is tidy enough to be entertaining, with lots of grip and progressive understeer when the front tyres do finally give way. Moreover, there's a decent amount of steering feel, yet the Panda's power steering is still light enough to make town work easy. There's a nifty 'City' button that increases the electric assistance, making it even lighter for parking manoeuvres. The only downside is a somewhat sharp brake action, but the Panda's anchors are still strong. And while the ride is firm, it soaks up town and country roads well.

Marketplace
The latest Panda recreates the original's simple-but-chunky styling - but our 2004 Car Of The Year is available in a wide range of models. There's a 1.3-litre diesel and 4x4 model now, complementing the original 1.1-litre and 1.2-litre petrol variants. It's just a shame you can't mate diesel to 4x4, while a hotter Sporting model with a 1.4-litre engine would be fun too. Active, Dynamic and Eleganza variants all provide showroom appeal, but it's the middle model that sells best - particularly as it's offered with good-value options packs, boosting the stereo and adding air con. The Panda doesn't have it all its own way though. The Ford Ka provides fine-driving competition, while the Citroen C1/Peugeot 107/Toyota Aygo are also very strong rivals.

Owning
The Panda's cabin is basic, but ergonomically strong. The big switches have a Tonka-toy simplicity abut them, and with the audio and climate controls all located high up near the driver, the layout is first class. There's a lot of grey plastic, but everything feels well screwed together and with good all-round visibility, an adjustable steering wheel and supportive seats, the Panda's driving position, while lofty, doesn't feel confined. Mounting the gearlever high up on the dash is also a great idea, and the driving position easy despite offset pedals. Good news for those in the back, with great leg and headroom. However, you'll have to pay extra for a third seatbelt and rear headrests. Split seats also cost more, but the boot is commodious. The small tank, however, is small - so it's fortunate the Panda is good on fuel, as well as proving cheap to insure and strong on the used market. It's just a shame servicing is expensive and, according to our Driver Power survey, dealers so poor.