As the small car becomes less of a convenience and more of a necessity to help alleviate the strain of fuel costs and congested roads, a number of events have transpired: more buyers means more competition, and in the last two years the venerable small car with its basic features and meager interior space is now packed with extras that were once the domain of much larger cars.

As engines and suspension become more compact, this too opens up more interior space, so the spatial sacrifices drivers once made in owning a small car are not so acute.

With this surge of interest in the small car sector, more and more car makers are joining the party. BMW did the unthinkable in releasing the 1 Series, Mercedes foresaw the trend and launched its own sub-brand in the form of the smart car quite some time ago, and the list goes on.

As more and more cash flows into the small car market, the ubiquitous halo models are of even more import to car makers than ever before. These aspirational and often sporty models give any particular range a knock-on effect, as buyers of lesser models get an idea of what the top shelf model offers, and may upgrade their wheels or bodykits in homage, perhaps even splurging on the actual halo model in the event of a job promotion.

As chance would have it, we are right now looking at one of these halo models, a German design no less, in the form of Volkswagen’s second smallest vehicle (the Fox isn’t sold in Australia), the Polo. But not just any Polo - this is the halo model, the cream of the crop, the special reserve, the top shelf sports model and the most powerful production Polo ever built, one that follows in the footsteps of the legendary Golf GTI. And in more ways than one...

The car rides quite nicely and, because it's not as tightly sprung as the Golf GTI, it's almost easier to live with day by day. It's got enough poke to fly past larger engined vehicles at the traffic lights and its small enough to easily navigate peak hour traffic and tight parking spots. Its tidy dimensions (it measures less than 4 meters in length) contribute a lot to the vehicle's overall ease of use, and though boot space may not be copious, nor rear seat room, the Polo is far from impractical.

However there are a couple of things that are irritating, such as the lack of a centre armrest. Even dough being a compact car and measuring only 1650mm in width, there's not much room for anything between the seats, but not having one might get you tipped of the seat while grabbing the wheel in a U-turn. Fit and finish is pretty good, and though leather costs extra, the standard cloth trim isn't too bad, and the cushioning is just right.

Comfort is pretty good for a small car, with reasonable rear legroom and good headroom all round. Wind and road noise aren't really noticeable, though engine noise is. At times this is a treat - its rev-happy turbocharged sound is rewarding. But the drone it creates on the motorway can make longer trips tiring. Rear passengers get a better deal in five-door models than in the three-doors. It's easier to get in-and-out of and there's slightly more legroom. However, the rear is only suitable for two adult passengers. Aside from that, the cabin is airy and light and there's good head and legroom for the front passenger.

Adhesion is a little wanting if you fly into a corner too hot, and the inherent understeer in the front-wheel drive vehicle makes correcting this troublesome, but in general the Polo GTI impresses with its well-sorted chassis.

If things do get wildly out of control, or perhaps on a wet day, the Electronic Stability Programme that ships as standard on the GTI will be a godsend, able to fiddle with a number of the cars parameters, such as torque, brake pressure and so on. Simply put, the ESP is designed to help you avoid potentially hazardous situations.

Some body roll can be felt when changing directions at higher speeds and its chubby 1190kg curb weight doesn't help, but in general it retains a good posture through smoothly surfaced corners, and the 5-valve turbo engine is quite the little devil, always keen to squirt out a bit more power when you ask nicely. Generating 110kW of power @ 5800rpm, the Polo will charge to 100km/h from rest in 8.2 seconds, which is pretty good for a compact hatch of this size. Peak torque of 220Nm hits the front wheels early on in the piece, @ 1950rpm, and though we can't vouch for the cars top speed (for legal reasons) let's just say that's bloody quick when given a bit of space and gentle tail wind.

The Volkswagen Polo GTI really is a sweet machine with a lot of go for something of is size, and the 1.8-litre turbocharged engine is delight to use, with good reserves of power and an ability to tick over quietly in order to save fuel at the same token. It always has been a great engine in its many applications in Audis and VWs over the years, and can be tuned reasonably cheaply - software and intake/exhaust - to output some serious numbers thanks to its 20-valve cylinder head (5-valves per cylinder).

We loved the fact that you can hear the turbo ever-so-gently spool up as the revs build and there’s a great sense of elasticity to the engine too. For instance you can drop it into a high gear and because the turbo has an all-areas pass to the party, you’ll always get a nice shove when it starts to huff and puff, and at times you can almost make out the waste gate venting exhaust flow in order to stick to prescribed boost levels.

The 5-speed manual gearbox, likewise, is a smooth operator. Featuring a light clutch and fairly short shifts between gates, it gets the job of gear changes done with minimum fuss. It does feel a little loose and floppy when pushed, but this is only an issue when you're chomping at the bit, charging hard, and trying to change gears in as little time as possible. During everyday driving and commuting, it works a treat.

The brakes are more than up to the task of decelerating the force-fed Polo, and though they don't provide brilliant feel or fade free performance 100 per cent of the time, they still manage to do the job asked of them, and were reliable enough - even when punished. This go-fast Polo is an impressive pocket rocket, and in addition to sharing the celebrated GTI moniker with what is arguably the most legendary Volkswagen hatch in existence, it also bears a close resemblance to its bigger brother, the Golf GTI. And while the car on test is not quite as accomplished as the level-headed Golf, the Polo in no way tarnishes the GTI namesake.

Mimicking its bigger brother - the five-spoke alloy wheels, red brake calipers, the sporty front and rear aprons, twin exhaust pipes, the rear spoiler and of course the red-rimmed grille with GTI lettering - the Polo cuts a fine figure and stands out as sporty, but without being too radical. The multifaceted headlights are sporty enough, while the integrated wing mirror-indicators add a little class to the fine young pup and though the car doesn't generate as much attention as the Golf GTI on the road, it's got plenty of road presence for something so small.

As is the tradition, the new Polo GTI features special sports seats with the typical checked “Interlagos” pattern. The sports steering wheel, gearshift knob and gaiter as well as the handbrake grip are leather. A metal-like surface enhances the look and feel of the centre console and panels around the side air vents in the cockpit. Features like red cross stitching inside the steering wheel and the red edges of the black seat belts, show the great attention to the finest of details. This also applies to the metal embossed shift pattern on the gearshift knob and to the aluminum pedals.

Fully-equipped GTI: Nothing has been sacrificed for the sake of spottiness in the Polo GTI. The controls are well-organized as usual, the quality is excellent, the cargo space is large (270 to 1,030 liters) and the rear bench is flexible (folding bench and backrest split 1/3 to 2/3). The proven body plus the front and side airbags ensure a reassuring level of passive safety — the front passenger airbag can be deactivated.

Inside the car, the cabin may appear a little sparse from the driver's seat, but more than anything that's due to ergonomic packaging of the HVAC controls and centre console. I actually liked minimal number of push-buttons and dials, and even the cruise control is a simplified stalk-mounted device. Everything that you'd expect from a Volkswagen is there, it's just been optimized for this application, and it works well. The tri-spoke leather steering wheel and gear shifter add a bit of spottiness to proceedings, as do the alloy pedals and aluminum-look dash garnishes, and the GTI is available exclusively as a 3-door.

Every Polo GTi has:

·         A honeycomb front grille

·         Twin tail pipes

·         Red brake calipers

·         15 mm lowered suspension

·         16-inch versions of the Golf GTI alloy wheel

·         ABS

·         Brake assist

·         ESP (Electronic Stabilization Program)

·         Dual front airbags

·         Front side airbags

·         Air conditioning

·         Remote central locking with alarm

·         Electric windows and mirrors

·         And a radio/CD player

The GTI is generously equipped with safety gear, boasting six airbags, anti-lock brakes, stability control and even a low tire pressure warning system. In NCAP testing, it scored four stars.

An omnipotent hot hatch? Not quite, but for what you pay it's tremendous value. You get a European built car for under $30,000 that features a turbocharged 5-valve engine, a car that mimics its bigger brother's good looks and is still very much a performance hatch, able to hold a respectable line through a corner and sprint away rapidly from standstill.

Clearly aimed at those younger buyers who may not be able to dance with the Golf GTI for fiduciary reasons, the Polo GTI is a fun to drive car with a very curious nature - as in "maybe I should give this big V8 a run for its money?" The turbocharged aspect of the car could make insurance premiums a bit stiff for the under 25s, but if this is of no concern you will find many years of driving enjoyment to be had with this energetic German.

If you liked the look of the Golf GTI, but didn't want to spend 40k, this could be the cost effective alternative you've been looking for. It's an accomplished vehicle, and with compact cars gaining popularity right around the world, the Polo GTI is a great hero model to top off the model range. Better yet, it adds a new and very worthy flavor to Volkswagen's famed GTI garage.