Fiat 500 hatchback

£10,690 - £16,000

The Fiat 500 is a retro-looking city car that recalls the original 500 of the 1960s and follows in the footsteps of other classic-inspired creations including the MINI hatchback and the Volkswagen Beetle. It's based on the Ford Ka and Fiat Panda and is built in the same Polish factory as they are. The city-car class has exploded since the 500 was launched in 2007, and its rivals now include the Renault Twingo, Volkswagen up! and Toyota Aygo. At the same time, the 500 range has expanded to include larger derivatives, such as the 500L MPV and 500X compact SUV.

Meanwhile, there's just one original 500 – a three door – powered by a choice of three engines. The most interesting (and the one we'd recommend) is the two-cylinder 875cc TwinAir turbocharged petrol, available in two power outputs. The 84bhp version returns a claimed 70.6mpg. That figure can be very hard to achieve in reality, but at least this version costs nothing to tax. The more powerful 104bhp version is also free to tax and returns 67.3mpg, while trimming a full second from the 0-62mph time to take it down to 10 seconds flat. Regardless of which version you choose, the TwinAir's distinctive engine note suits the 500 perfectly.

The other engines are a 69bhp 1.2-litre petrol (returning 58.9mpg) and a 1.3-litre Multijet diesel (which returns a claimed 78.5mpg). The 500 has a manual gearbox as standard; an optional automatic costs £750.

The 500's compact dimensions and clever City Steering mode (which lightens the wheel at the touch of a button) make it fun to drive in town. However, it can feel out of its depth on the motorway. Although the 500 is small outside, inside it's actually quite roomy, with space for four adults and a decent-sized boot.

In keeping with its funky, playful character the 500 is available in five different trim levels and at least that number of special editions. Featured trim levels are Pop, Cult, Colour Therapy, Lounge and S. With its steel wheels and black plastic wing mirrors, Pop is the basic version. Lounge brings a good mix of luxury and convenience features, including air-conditioning, a fixed glass sunroof and alloy wheels, and it's our favourite trim. Colour Therapy offers a choice of contrasting colour schemes, but serves as a warning not to go overboard with options and personalise your 500 too much, since you may lose even more money when you sell it.

The 500 feels like a quality car, but owners aren't too impressed with its reliability record. Fortunately, it's a reasonably safe car, achieving the full five stars in the Euro NCAP crash tests, albeit under the old, slightly less stringent test programme.