Hyundai's little i10 makes a really big impression on everything but running costs, says Peter Franzen.

Despite a 'reprieve' on the price of fuel in the Budget, the cost of motoring is moving in only one direction. And that's up. Not just on the back of fuel prices, but insurance and the cost of servicing and repairs are also rising.

So how about a well-equipped, brand new car for a tad over �9,000 on the road? It will stretch a gallon of fuel over 65 miles and the emissions are so clean that it does not qualify for road tax and is not subject to the London congestion charge. Oh, and by the way, it comes with a five-year guarantee and the company's triple care warranty, which ensure peace of mind by offering unlimited mileage cover, free car health checks and roadside assistance for five years.

So what is it? It's Hyundai's i10, a small town car that also more than punches its weight beyond the urban streets. This refreshed version of Hyundai's entry-point model has received consistent praise from press and public alike since its launch in 2008.

By mixing unexpected quality with a high specification and affordability, the i10 has helped boost attitudes towards Hyundai – elevating the i10 to becoming the brand's biggest-selling model in Europe in 2009.

The face-lifted i10 probably still won't get your pulse racing for its visual attributes, but what's inside the 'box' and the way it delivers it prompt closer examination, not to mention value for money. The price of the i10 starts at �8,195 on the road, but the model I chose from the list was the new Blue version. It carries a premium of �1,000 over the entry level Classic, but I reckon it's worth it.

The Blue features the latest version of Hyundai's Kappa engine. It's a one-litre, three-cylinder unit that will travel just over 67 miles on a gallon of petrol, calculated on the combined fuel cycle, with CO2 emissions that are remarkably low at 99g/km.

A special 'Blue Drive' badge is fitted to mark the car out as one of Hyundai's most efficient, environmentally-friendly models. This will appear on other Hyundais in the near future. Unlike rival models that are designed to maximise fuel economy, heavy but still important items such as the spare wheel have not been sacrificed from the i10 Blue in the pursuit of low emissions.

It may be Blue, but the five-door test car that arrived at the EDP was bright red. I quickly dubbed it Postman Pat, because like the character in the kids' TV show, it became a family 'friend' and object of affection. Don't be fooled by the compact dimensions, the versatile interior means you really can transport a growing family and all that travels with it.

With a 0-62mph figure of 14.8 seconds and a top speed of 93mph, you might expect the i10 to feel sluggish. But the perky little engine has plenty enough power for the urban streets, and will bowl along at motorway speeds without stress. The engine is matched to a nice-and-easy five speed transmission that has no glitches. The Blue model is the only one that uses Hyundai's intelligent stop-and-go system that automatically kills and restarts the engine when the car is idling to save fuel. Also unique to this model are low-rolling resistance tyres, an alternator management system, and an 'eco shift' indicator to help the driver use the car as efficiently as possible.

I was surprised at how comfortable the ride was on such a short wheelbase car, and only over really poor surfaces did it start to feel 'choppy'. Noise levels are well suppressed, although at motorway speeds you tend to notice the road noise starting to intrude, reminding you that it is a small car. With a 'square' shape and thus little overhang, the i10 is light and easy to park.

Although Hyundai says that the i10 is a five-seat model, I reckon it would be quite a squeeze for five adults. Mind you I used the Blue to transport four adults and it was surprisingly comfortable – although a bit tight for rear legroom – so three youngsters across the back seat would be possible. Luggage-wise the boot space is quite reasonable for a car of this size, and the rear seats fold down easily for the occasional big load.

A more upmarket look and feel has been brought to the i10's cabin with the 2011 upgrades. It now offers an ambience comparable with cars from the class above, including a new instrument cluster with striking blue illumination.

The standard equipment levels of the i10 would be seen as generous on a larger family car. Air-conditioning, electric windows, 13in wheels, six-speaker stereo and four airbags would present a good offering in a car costing a lot more. The company hasn't cut back in other areas either. There are Isofix child seat mountings, colour-coded bumpers, central locking, an integrated radio with MP3-compatible CD player and that all-important USB and iPod plug-in as standard across the range.

All of this makes the i10 Blue one of the cheapest cars to buy and run on sale today. And in the current climate that's a pretty powerful argument.

HYUNDAI i10 BLUE

Price: �9,195 (range from �8,195)

Engine: 998cc, 68bhp, three-cylinder petrol

Performance: 0-62mph 14.8 seconds; top speed 93mph

MPG: Urban 56.5; extra urban 74.3; combined 67.3 mpg

Emissions: 99g/km

Benefit-in-kind tax rate: 10pc

Insurance group: 9 (out of 50)

Warranty: Five years/unlimited mileage

Will it fit in the garage? Length 3,565mm; width (including mirrors) 1,860mm; height 1,540mm