Bosses at Kia plan to beat the European Car of the Year-winning Panda on showroom value, build quality and safety features.

Kia Motor UK managing director Paul Williams said: 'Fiat is famous for producing very good small cars and the latest Panda maintains this tradition. But we will soon prove that our new Picanto is able to out-perform it in several crucial areas. Our car will be a class leader that adds up to a better deal on all fronts.'

In an outline of the impending David and Goliath struggle as the Picanto was being launched to the international media in Italy, Williams told Fleet News: 'We intend to rival the Panda with a product that is superior in many ways – but we plan to come in with aggressive pricing as well to make sure the car wins the attention it deserves.

'We might be new to the A-sector, but we believe customers who sample the Picanto will be surprised to find that far from being an also-ran, this South Korean product is thoroughly European and a front runner. We are also confident it will open a few more doors for us in the fleet sector.'

Due to go on sale at the British Internmational Motor Show held in Birmingham in May, the new entry-level range will spearhead another step in the campaign to lift market share for the Hyundai subsidiary that achieved spectacular growth last year.

Williams said: 'We broke all records to increase registrations to more than 21,000 in 2003 even though our cars covered only 35% of the market. With the Picanto and the Cerato, our new C-segment hatchback launched at the Geneva Motor Show, our coverage will be extended to around 80% to fuel further expansion.'

Initially available with 1.0-litre and 1.1-litre petrol engines, the Picanto is expected to contribute 6,000 registrations to Kia's target of 30,000 total sales this year, but the addition of 65bhp, 1.2-litre, three-cylinder turbodiesel versions will allow the model to account for 10,000 registrations in 2005.

'As a relatively young company, each new car is important in contributing to growth, but Picanto is especially significant because it takes us into fresh territory and allows us to start developing Kia into the smart brand to be with. My aim is for this brand to be as familiar as easyJet, IKEA or Virgin and I know we can do it in time. But I don't intend losing our high-value credentials on the way there,' said Williams.

'Relationships with contract hire and leasing companies are a key element of our expansion plans because they will provide a high level of exposure to the product. This has worked well with our Sedona and Sorento models and I'm sure the companies will soon be identifying opportunities with the Picanto.

'We have not had many cars that were attractive to the corporate market in the past, but that's now starting to change as new models arrive and our dealer network gets nearer the 150 mark. But it is important that we learn to walk before we run – we are setting up a structured approach to the fleet sector and will not take measures for short-term benefit that end up compromising us over the long term.'

Three versions of the Picanto will go on sale in three levels of trim and an automatic 1.1-litre will also be offered. All versions will feature anti-lock braking with electronic brake distribution, twin airbags, power steering, a CD player and power windows as standard - an equipment level Williams maintains is unmatched in the sector.

He said: 'It is particularly impressive compared with the entry-level Panda, which doesn't have anti-lock braking and offers only a driver's airbag. We rate our packaging as a significant advantage and our research has given us a lot of confidence.

'Our car has been well received when it has been shown to potential customers alongside the Panda. That's important, because around 90% of our growth will come from conquest business in the next two years, and I'm hoping that we will take some sales from the Ford Ka, Nissan's Micra and the Vauxhall Corsa in the process. This car is so good that it might even nibble away at the bottom end of the B-sector as well.'

Behind the wheel

THE first Kia developed specifically for Europe succeeds where it matters most and comes with cheeky, attractive looks into the bargain.

But the Picanto needs to be an all-round star performer if it is to make a significant dent in sales of the Panda, one of the better efforts in years from beleaguered Fiat and a car that has earned critical acclaim as well as the coveted European Car of the Year award.

So how does the new kid on the block measure up? Well, it's relatively roomy, nicely engineered and well finished. Its super-smooth 1.1-litre engine is inaudible when idling and makes only a little more noise on the move.

Acceleration is on par with class standards, so overtaking calls for plenty of advanced planning, but once it is wound up, the little motor cruises easily at 80mph on the Italian autostrada. Soft damping spoiled the poise of my pre-production test model at speed, and Kia promises that UK market examples will have firmer settings.

Around town, the Picanto is easy to handle. With a slick, short-throw lever making light work of gear changes, negotiating busy streets is a breeze.

A variety of poor road surfaces put build quality to the test but failed to invoke a single rattle or squeak. For its size, this little car offers adequate space and comfortable seating, although the combination of two-tone colours for interior trim may not appeal to everyone.

Designed to have some of the features of a multi-purpose vehicle, the car has good head and leg room, a total of 15 storage areas around the cabin and a 60/40 split rear seat that can be arranged in several different ways to expand luggage volume from 157 litres to 882 litres.

Driving verdict

Little cars are getting bigger – and the Kia Picanto adds five-door versatility for good measure. In another demonstration of Hyundai-Kia's intent to be a top five global manufacturer by the end of the decade, this is a likeable package that's also unusual in offering a choice of seating layouts for two or three rear occupants.