Kia’s ambitions are clear. It wants to be truly competitive in every market in which it competes. Across its range of cars each new generation has seen a significant raft of improvements over the last and the Picanto is no exception.

There’s no three-door version this generation. It vanished midway through the mkII’s life cycle and, as it accounted for just 10 per cent of sales, Kia have decided to sell the mkIII in five-door configuration only.

It’s footprint is exactly the same as the outgoing model – unsurprisingly, perhaps, Kia’s research has shown that people looking to buy a car in this segment don’t want large vehicles – but passenger space has been improved by adding 5mm to its height and increasing the space between the wheels by 15mm.

The front overhang has been shortened to give it a squatter, sportier stance while the rear overhang is longer to improve luggage space which is now up to a class-leading 255 litres, an impressive improvement of 55 litres over the previous model. Fold the rear seats away and space rises to 1,010 litres.

The waistline has been lowered to create a lighter, airier cabin, the dashboard is slimmer to improve passenger space in the front and the seats are sited lower and further back. Passenger space has been improved in every dimension compared to the mkII.

The range consists of, 1, 2 and 3 plus the flagship GT Line. The base model includes auto headlights, electric front windows and radio with USB and aux inputs. I tested the 2 spec model, which adds air-con, rear electric windows, Bluetooth connectivity, heated mirrors, 14in alloys and body-coloured exterior trim to the mix.

The top-of-the-range 3 spec is equipped with 15in alloys, autonomous emergency braking, door mounted LED indicators, electric folding mirrors, seven-inch touchscreen satnav with DAB, six-speaker audio system and rear parking camera.

The GT Line dispenses with the touchscreen but adds another inch to the alloys and a sporty body kit while the GT Line S reintroduces the touchscreen, plus heated seats and steering wheel, electric sunroof and wireless phone charging.

There are three petrol engines to choose from: A 66bhp 1.0-litre 3-cylinder unit that powered my test car, a 4-cylinder 1.25-litre engine with 84bhp and a turbocharged 3-cyclinder power plant with 99bhp on tap. A five-speed manual gearbox is standard but you can opt for a four-speed auto with the 1.25.

As well as increasing passenger space, the changes to the wheelbase have also improved manoeuvrability, essential to a city car’s appeal, with a tighter turning circle meaning that the new Picanto is absolutely in its element on congested streets. It’s well-judged controls, nicely weighted steering and fleet-footed handling make light work of urban driving.

The Picanto is as much an inter-city car as it is city car. You can tackle longer journeys with ease thanks to excellent refinement if not great pace. The 66bhp unit in my test car takes a leisurely 14.3 seconds to reach 62mph so overtaking does require a reasonable amount of consideration. It can be a little breathless when pushed, though its characterful soundtrack is pleasing, but it’s very well suited to the demands of driving around town.

The Picanto sits on Kia’s all-new H platform. Greater use of high strength steel and structural adhesives has improved torsional stiffness by 32 per cent and tensile strength by 12 per cent. For you and me, that translates into a quieter, more comfortable and refined ride, as well as improved impact protection.

The mkIII retains the MacPherson strut set-up of its predecessor at the front but, at the rear, it features a U-shaped torsion beam with revised trailing arms for improved handling and reduced weight.

The changes have given the new Picanto a more mature, grown-up personality from behind the wheel. That doesn’t mean it’s only to find favour among middle-aged, green-fingered folk meandering towards retirement via the garden centre because you can still have fun with the little Kia.

It’s agile and responds accurately to steering inputs, although the lack of power does mean you’ll have to work the slick five-speed manual quite hard to keep the pace up.

The quality in the cabin is very good. Kia have clearly worked hard at producing a well-built, functional and ergonomically sound passenger space. It’s a little uninspiring – black and grey cloth is standard – unless you opt for one of the colour packs but there are some interesting design features, such as the oval air vents.

You do feel as though you are perched on the seats, rather than in them, but they are comfortable and supportive. There isn’t a great amount of flexibility in the seating and steering column positions but what there is should be enough for the vast majority of motorists. The dashboard has been raised by 15mm to improve kneeroom.

Visibility is excellent thanks to narrow pillars and the vertical rear screen. There’s a reasonable amount of storage, with decent-sized door pockets and glovebox. There’s a couple of cup holders ahead of the gear lever too.

Access to the rear is easy thanks to wide-opening doors. There are two seating configurations – the four-seater produces 10g/km less CO2 – but the extra seat does come in handy even if, this is a very small car, don’t forget, it’s really only practical for occasional use.

The increase in wheelbase has been put to good use, improving passenger space for occupants in the front and back. In fact, head and legroom is impressive for a car of this size while the boot promises best-in-class capacity with the rear seats stowed, swallowing 1,010 litres.

The new Picanto is a serious upgrade over the previous model. It retains its predecessor’s compact dimensions but Kia have still manage to liberate more passenger space. It’s good to drive and the equipment list is generous. You also get Kia’s seven-year warranty for good measure.

Kia Picanto 2

Price: £10,750

Engine: 1.0-litre 3-cylinder

Transmission: 5-speed manual

Max power: 66bhp @5.500rpm

Max torque: 96Nm @ 3,500rpm

Max speed: 100mph

Acceleration (0-62mph): 13.8sec

Urban: 50.4mpg

Extra urban: 76.3mpg

Combined: 64.2mpg

Emissions (CO2): 101g/km

Visit www.kia.co.uk for more information