Sector: City car Price: £11,125–£13,820 Fuel: 68.9–67.3mpg CO2: 93–97g/km

Over the years, with 1.6 million sold, the ForTwo has becomes synonymous with urban life and for a number of businesses, has proved a distictinctive way to get their message across. But for Daimler, it has been an incredibly expensive good idea. It is thought it has lost Daimler many billions since it launched in 1998.

But with this new model, Daimler hopes to have turned the corner. More refined, and better built, the ForTwo is effectively a shortened new ForFour or Renault Twingo, which is where a lot of the development cost has been subsumed, by using the same three cylinder engine configurations and similar underpinnings.

The ForTwo’s styling is less cute than before though, having grown from its iconic one box design into a more conventional “one-and-a-half box” silhouette, necessitated by its lineage to the larger cars and the need for better crash protection.

The track and overall width is 100mm wider than previously although the car is no longer, but in the cabin the extra space, and the better use of it, is apparent while the utilitarian plastic knobs and hard surfaces have been replaced with nicely detailed and trimmed sliders, soft touch surfaces with LED backlighting, while the doors even shut with a thump rather than clang, like a real car.

Two improvements to the drive are immediately noticeable: the ride quality is vastly better and so is the gearbox. The suspension deals with sharp impacts far more compliantly than before, due to increased spring travel and higher tyre sidewalls, although you would never call it a soft car. That short wheelbase still means it bonks as one entity over bigger obstacles such as speed bumps.

Also, nearly all the cars at launch were the new five-speed manual but a couple of pre-production autos were available to show it’s not going to be as bad as before. In the old car, that curmudgeonly box became less crotchety with age, but the new twin clutch one is much smoother from the outset. And a Smart feels like a car suited to a good auto – just stick your foot down and whizz into gaps with no delay.

In town, neither the 70bhp naturally aspirated or 88bhp turbocharged three cylinder petrol engine get a chance to show their limited performance off but both feel sprightly enough to allow plenty of lane swapping. As you might expect, the ForTwo changes direction fairly sharply, although doesn’t feel unbalanced by it thanks to its four-square stance.

The Twingo and ForFour, and the previous ForTwo, have incredibly tight turning circles, but this ForTwo makes them all seem lumbering, finding itself pointing in the other direction in a space of less than seven metres.

There are three trim levels – passion, prime and proxy – with other offerings such as an app that allows drivers who find odd spaces in which to cram a Smart to take pictures and post their locations for other Smarties to use. But it is not exactly cheap, with the lowest priced model starting at more than £11,000. How is that the case, when an entry level Twingo costs £1,600 less? Clearly Daimler fancies making some cash on it at last.

 Verdict:

The new ForTwo feels more grown-up and refined, while retaining its impressive inner-city performance, but it is expensive for a two seater, no matter how clever it is.