LESS than six years after the original Punto hit the showrooms, Fiat has launched its replacement. It's a measure of the pace of car development that this is not merely a facelifted original but a completely new car that incorporates the latest innovations and technology. The Punto has been fundamental to Fiat's growth in the UK, achieving a top-four ranking in the supermini segment with sales in 1998 - its best year here - of more than 52,000 units. It was Europe's best-selling model overall in 1997.

The new Punto aims to take over where the old left off, but brings with it vastly improved build, some interesting technical innovations and a 16-model range with pricing that, by and large, matches that of its predecessor. Its styling is fresh and dynamic and uses two entirely different rear ends for three and five-door models, reflecting the different target markets for each variant. There are five engine options - 1.2 8v 60bhp, 1.2 16v 80bhp and 1.8 16v 130bhp petrol, a 1.9-litre normally-aspirated 60bhp diesel and a 1.9-litre common rail turbodiesel developing 80bhp.

Five trim levels encompass base, ELX, HLX, Sporting and HGT, with prices starting at ú7,815 delivered for the three-door 1.2 8v and rising to ú13,315 for the three-door 1.8 HGT. That pitches it below entry level rivals such as the Renault Clio, Peugeot 206 and Volkswagen Polo, though the new Ford Fiesta Encore 3dr is cheaper at ú7,570. The old Punto 60S and 60SX accounted for some 65% of Punto sales in the UK, and it's likely the new 1.2 base and 1.2 ELX models in both 8v and 16v forms will follow suit.

The neat-looking Sporting, which uses the 80bhp 1.2 16v engine, is anticipated to take some 5% of sales. Next April, this model gets the option of an innovative seven-speed sequential automatic transmission, confusingly the same gearbox that's also fitted in six-speed form to ELX 1.2 16v models. Though diesels traditionally account for a relatively small percentage of supermini sales, the Punto's 80bhp 1.9-litre JTD unit is a mould-breaker because it marks the first use of common rail technology in the sector: Peugeot's 206 HDI doesn't debut until early next year, while Volkswagen's pioneering three-cylinder TDI unit doesn't arrive until January.

It means the diesel Punto holds a technological advantage in the class - at least for the time-being - and posts the best fuel consumption and lowest CO2 emissions at 57.6mpg/130g/km. But it's the 1.2 16v we test here, in level two ELX trim, the model that will account for the core of sales. In five-door form, it costs ú10,494 on-the-road.