The latest in a line of chic, retro-themed boutique cars, the Fiat 500 packs plenty of style into 355cm.

Fully half a century after the launch of the original Fiat 500, it's back. It was one of the worst kept secrets in motoring with the Italian maker displaying the Trepiuno concept car back in 2004. Most people realised that putting this car into production, based on a modified Panda chassis, shouldn't prove too difficult and three years later it appeared, polished, primed and with its sights set squarely on BMW's MINI.Fiat has latterly built a reputation for having a wide range of excellent powerplants, especially at the smaller end of the product portfolio. It was to Fiat that Suzuki turned when they wanted a small diesel for their SX4 model, offering the Italians what was to become their Sedici in exchange. Indeed, the 75bhp 1.3-litre 16v Multijet diesel engine fitted to the 500 is so good that it rather overshadows the otherwise excellent pair of petrol powerplants. These comprise an entry-level 69bhp 1.2 8v and a punchy 100bhp 1.4-litre 16v. Five or six speed manual transmissions are offered and the 500 has been designed to replicate the original car's nimble feel and ability to put a smile on its driver's face. A 155bhp 1.4-litre turbocharged Abarth model is also in the pipeline, fully tooled up with beefier steering, retuned suspension and a few aerodynamic tweaks.Much of the underpinnings are based on Panda running gear no bad thing as the Panda is good fun to drive. Like the Panda, the 500 uses simple MacPherson strut suspension up front and a basic torsion beam at the back. A few centimetres have been added to the width of the car's track, giving it a foursquare appearance and Fiat claims that body rigidity is around 10 per cent better than the Panda.The 500 is significant in more than the obvious ways. Built at the Tychy plant in Poland alongside the Panda, the chassis also forms the basis for the all-new Ford Ka. At 1.65m wide, 1.49m high and 3.55m long, the 500 doesn't take up a great deal of space. For reference, a MINI is 1.91m wide, 1.40m high and 3.68m long: in other words much wider, a little lower and a fair bit longer. Even Renault's second generation Twingo, at 3.60m, won't fit into some parking spaces the 500 will be able to squeeze into.Delicious design details drip from the 500. It's like a tiny pearl, especially when the ivory finish interior is specified. There's a very well-judged blend of retro chic and ruthlessly modern contemporary design inside, with circular head restraints, a glass roof and iconic 500 badging on the Panda-sourced dashboard.Chrome-ringed vents and a fascia that can be specified in the same colour as the body, mirroring the painted metal dash of the Nuovo 500, are just some of the interior design features. The exterior treatment is cool and clean with only the front grille and door handles differing significantly from the Trepiuno show car. Hats off to Fiat in this regard. So often we see cars that look fantastic as prototypes on a show stand only to be virtually unrecognisable when they arrive in production form.Prices are surprisingly reasonable, given the publicity surrounding it. Starting at under �8,000, the car is only fractionally more expensive than the Panda citycar on which it is based. Prior to the 500's arrival, the speculation was that it would target the kind of premium prices that BMW charges for its MINI but Fiat is sticking to what it knows with affordability remaining a key weapon in the armoury. This is a far more faithful interpretation of a classic motoring icon than the Bavarians have been able to achieve. And, if you don't care about badge equity, don't mind about the fact that you only get three doors, and get the right deal, the Fiat will make plenty of sense.Fiat's Panda is one of the cheapest cars to own, so the '500' will prove little different. The Multijet diesel version will average over 65mpg, with the 1.2-litre petrol unit not far behind on around 50mpg. Depreciation won't be anything like at MINI levels but will be much better than you'd expect on a Panda. Which is good news since insurance costs shouldn't be much more expensive.Whether you love or loathe the Fiat 500 very much depends on your standpoint on retro design. Some see it as a shameless plundering of a company's crown jewels, a pastiche that suggests the manufacturer has run out of good ideas. Others see retro cars as a celebration, offering the style and appeal of the 'oldies' with modern safety and efficiency. I have to admit that I fall somewhere between these two extremes. When done well, as in the MINI and the Ford GT, retro works. On the other hand, I was glad Lamborghini never brought the rehashed Miura to market and feel that the new Beetle never really did enough to justify its existence.The 500 seemed destined to succeed from the outset. There's such a cheekiness and personality to its design that people would have bought the car even if it was irredeemably awful in every other respect. As it is, it's really rather good. If you're looking for cheeky, cheap and practical, a Panda is probably still a slightly better choice. If a style statement is more your thing, the 500 gets the vote every time.FACTS AT A GLANCECAR: Fiat 500 rangePRICES: �7,900-�10,700 - on the roadINSURANCE GROUPS: 2-4CO2 EMISSIONS: 149 g/kmPERFORMANCE: [1.4] 0-62mph 10.5s/Max Speed 113mphFUEL CONSUMPTION: [1.4] (combined) 38.5mpgSTANDARD SAFETY FEATURES: Driver and passenger airbagsWILL IT FIT IN YOUR GARAGE? L 3550 x W 1650 x H 1490mm