A new entry-level hatch aims to woo new converts to the brand and hybrid power, says Andy Russell.

I normally try to avoid driving through Norwich like the plague, preferring to skirt round the outside on the southern bypass and coming in on the other side.

It may be further but invariably it's quicker, far more fuel-efficient cruising along in top gear rather than all that stop-go, to and fro through traffic-clogged roads and it's may way of helping to relieve congestion in the city.

So driving the new compact Lexus hybrid meant doing something of a U-turn, but it was to my mindset rather than in the road when confronted by snarls and jams.

For one week only I actively sought out criss-cross routes through the city wherever possible to see just why Lexus and parent company Toyota are putting so much faith in hybrids.

Toyota may have kicked things off with the Prius but it is luxury arm Lexus that has risen to the green challenge with a range that is almost entirely hybrid – combining petrol power with electric motors and the ability to run on one or the other or a combination of both.

The latest model may be the smallest but it is likely to be the most important Lexus has launched so far because it takes the brand into the premium compact sector against the likes of the popular BMW 1 and 3 Series, Audi A3 and A4 and Mercedes-Benz B and C-Class. And with prices from �23,485 it makes this prestige brand more affordable and should appeal to new and younger customers.

In its favour the CT200h has the novelty factor of being the only hybrid and therefore the greenest which is increasingly finding favour with car-buyers, but in such illustrious company, it is going to have to look the part and, in its favour, everyone who saw was suitably impressed by its stylish lines.

But while the CT200h is a new car for Lexus, unlike other models from the brand, it is not completely new for it shares its hybrid system with the Toyota Prius mating a 1.8-litre engine with an electric motor which doubles up as a generator to recharge the battery under braking and on the over-run. Offering the choice of relaxing or dynamic driving modes – the power system can be set in Eco or EV (electric vehicle when it can travel about a mile at up to 25mph purely on the battery), Normal or Sport. The latter mode gives more power from the battery and sharpens the throttle and electric power steering while the backlighting for the instruments changes from blue to red and the hybrid system gauge becomes a rev counter.

Not that you really need a rev counter because, being mated to a CVT automatic transmission, the revs just rise and stay there when you put your foot down hard, accompanied by a drone from the normally quiet and refined engine. With the best will in the world the CT200h, like the Prius, is not exciting to drive but then its mission is to be green rather than mean.

I treated it as a challenge to drive as gently as possible, using the EV mode as much as I could – it's surprising how far you can go, lift off the throttle and you can hold 30mph on battery alone – and while I never saw more than 55mpg overall with open road driving, I regularly returned mid-70s in slow-moving, stop-start city traffic and this is what hybrids are all about so in that respect the CT200h has much to offer, even more so if most of your driving is in city traffic or you regularly visit London because it is exempt from the congestion charge and nor do you pay annual road tax.

For a Lexus the ride is on the firm side, rather sensitive to poor surfaces so you're always aware what's going on beneath the tyres and there's noticeable road noise, partly because the engine is so quiet when cruising. The electric power steering is accurate but lacks feel and feedback. On the plus side, the CT200h corners flatly, helped by the drive battery helping to give it a low centre of gravity, so you can carry speed through corners which helps in maintaining a smooth driving style to maximise MPG by minimising the need to keep accelerating.

Inside, legroom in the back is adequate for adults but you'd hardly call it spacious and it's a similar story with the boot which, with its sill-height floor is shallow as a result of the drive battery located under the back seat and part of the boot floor. Lift the boot floor and there is a usefully large compartment for soft bags but it's all a bit of a compromise. Rear seat backs split 60/40 and fold flat with the boot floor.

No complaints though about the quality of the cabin – it shows the Lexus addition to detail with top-notch trim and materials making it a very pleasant place to be. The dashboard is smart and interesting, without being complicated and over-fussy, with clear displays and sensible switchgear. The only thing that takes some getting used to is the optional computer mouse-like remote touch control system for the satellite-navigation and other functions and nor does it look as classy as the BMW and Audi multi-media interface (MMI) controllers.

Three models are offered – SE-I, SE-L and SE-L Premier – and even the entry version is stacked with standard equipment with eight airbags including front knee ones, traction and stability control, Bluetooth, automatic wipers, multi-information display and six-speaker radio/CD/MP3 player with auxiliary socket and USB port. SE-L adds leather upholstery and heated front seats while SE-L Premier has upgraded Mark Levinson sound system, satellite-navigation, electric front seats, auto-dimming door mirrors and LED headlamps and daytime running lights.

Lexus has proved in the past that it is good enough to take on the might of the German giants at the top end of the market, with the new CT200h it is offering a many more people the opportunity to go green in a prestige product.

LEXUS CT200h SE-I 1.8 HYBRID DRIVE

Price: �23,485 (to �30,635)

Engine: 1,798cc, 98bhp four-cylinder petrol engine combined with 82bhp electric motor/generator and high-voltage battery giving hybrid system a combined maximum output of 134bhp

Performance: 0-62mph 10.3 seconds; top speed 112mph

MPG: Urban 68.9; extra urban 70.6; combined 68.9

CO2 emissions: 94g/km

Benefit-in-kind tax: 10pc

Insurance group: 15E (out of 50)

Warranty: Three years or 60,000 miles (hybrid system five years or 60,000 miles)

Will it fit in the garage? Length 4,320mm; width (excluding door mirrors) 1,765mm; height 1,440mm