Honda has enhanced its Civic's appeal with a new small-capacity, high-power, super-frual, low-emission diesel engine, Iain Dooley, PA senior motoring writer, puts it through its paces.

Now that we've all had time to get to grips with Honda's latest-generation Civic, you'd be right in thinking there was still something missing.

For all the car's swoopy exterior styling and the welcome reintroduction of a rear wiper, there's been a hole the size of a small-capacity diesel engine in the Civic's range since the car was first launched. The only option for buyers has been Honda's long-serving 2.2-litre unit.

That's now been fixed with the long-awaited appearance of the company's new 1.6-litre unit, which at last puts the Civic on a more competitive footing within the company car community.

And to prove that it's been paying attention in the intervening years, Honda has come out fighting with a sub-100g/km CO2, 70mpg-plus motor to challenge the efforts of the more established players.

While the basic Civic package hasn't changed, the new engine has plenty of intelligent engineering. In a bid to reduce losses – the enemy of any eco-centric strategy – Honda has focused on minimising friction in the engine. Along with reducing weight, such as lighter pistons, Honda's efforts have resulted in a headline-grabbing 94g/km CO2 and 78.5mpg.

Clearly these figures will please fleet managers greatly, and if you're a company car driver the resulting low real-world running costs will be hard to ignore.

However there's got to be a catch, right? Unlike in the past when you'd have to choose between meaningful performance or planet-saving economy, Honda's 1.6-litre diesel puts out a healthy 120 horsepower – more than enough to make the daily commute a pleasant experience.

So no, there really isn't a catch. This Civic delivers brisk performance around town and is equally happy keeping up with faster traffic on motorways. And it's this aspect of the car that Honda is keen to promote – the ability to choose it with your head plus satisfy your heart and enjoy its no compromise performance.

Continuing the enjoyment theme, while the Basic Civic package hasn't changed since its launch the 1.6 diesel's low weight has resulted in a car that's noticeably more engaging and willing to change direction than its 2.2 diesel stablemate.

It's on country roads where you'll see the biggest improvements, but even in urban situations the reduced weight over the car's nose results in a more direct, responsive driving experience.

Factor in Honda's trademark slick manual gearshift and it's clear that the engineers have been keen to retain as much tactile appeal as possible despite the increased focus on squaring the economy circle.

Another upside to Honda's determination to avoid going down the 'hair shirt' economy route is the Civic's general air of refinement, be it the lack of any distracting noise entering the cabin or a poorly set-up suspension system.

As a result of this 'better late than never' approach, Honda has succeeded in giving the Civic's appeal a welcome and noticeable boost – in the new 1.6 diesel guise.

A long overdue increase in the car's company car appeal is sure to follow the introduction of this green and engaging 1.6 diesel engine version, while keen drivers will be pleasantly surprised by the car's agility and polished road manners.

As for the rest of the car, the Civic still offers buyers a well-built, high-quality cabin that has no problem swallowing a full complement of adults. The car's equally voluminous boot – complete with false floor – puts rivals to shame. The inclusion of trick folding rear seats that allow fold flat and forward options to further enhance the Civic's load carrying capacity do much to cement the hatchback Honda's versatility credentials.

Once viewed by some critics as a largely left-field choice for mainly private buyers, the arrival of this super-green diesel version for the latest-generation Civic should do much to enhance the car's chances in the ultra-competitive family hatchback and company car markets.