It"s got the class-leading...

It"s got the class-leading Renault Clio and new Vauxhall Corsa in its sights - as well as the sales success of its predecessor. But let"s be clear. Meeting expectations in 2007 will require something very special. After all, the original Fabia accounts for half of all Skodas on the UK"s roads, and a total of 1.5 million have found homes around the world.

The suspension swallows road bumps with ease, and at motorway speeds the Fabia is quiet and refined

So the newcomer has its work cut out. Fortunately, first impressions are good. Longer and taller than the outgoing car, the Fabia shares its design with the Roomster compact MPV.

It has the same distinctive nose and upright, wraparound windscreen, while the angular rear and sloping roof panel can be emphasised with an optional contrasting roof colour, just like on the new MINI.

Inside, the old Fabia was notable for offering near VW levels of fit and finish in the non-premium market, and the new model is better still. The dashboard"s soft-touch panels fit together perfectly, and look especially good with a new two-tone colour option.

The front seats are comfortable, the steering adjusts for height and reach and there is more than enough headroom for two six-footers. Storage space is provided throughout, but the bins are a little small. There are two tiny gloveboxes, the upper one being air-conditioned to keep things cool.

But even though the Skoda feels big for the class, accommodation in the back is a disappointment - especially as it doesn"t have the sliding rear seats of some of the competition. Tall adults can just about sit one behind the other, but it leaves the cockpit cramped. A huge range of engines is on offer, starting with a 60bhp six-valve 1.2-litre, rising to a 105bhp, 1.9 turbodiesel.

We drove the two models likely to be the best-sellers, the 80bhp 1.4-litre turbodiesel and 86bhp 1.4 petrol. The latter unit is refined and smooth all the way to the red line. It can get a bit vocal when stretched, but 0-62mph in 12.3 seconds and a top speed of 108mph are respectable.

The diesel is the popular three-cylinder unit, which is noisy at idle, but surprisingly refined at speed. It"s more torquey than the petrol and delivers superb economy of 61.4mpg. The handling, meanwhile, is good, but it"s clear that the little car has been built for comfort rather than speed. The suspension swallows road bumps with ease, and at motorway speeds the Fabia is quiet and refined.

There"s some body roll in corners, but it is well controlled. And although the steering doesn"t have much feel, it"s direct and well weighted, while the brakes are powerful. So we ended our test drive very impressed. The Fabia has never looked fresher, and Renault and co. should be worried.