Sector: City car Price: £9,745 Fuel: 74.3mpg CO2: 88g/km

In 2005, PSA and Toyota redefined the small car segment with their cab-forward monobox city cars. No doubt tax and economical pressures have helped, but that segment has grown exponentially in the UK since – from 117,000 to 242,000 last year.

That’s a market Peugeot is keen to hang onto, so while the three manufacturers have continued to develop and build their cars together, there’s been a noticeable effort to define each one as its own model. Toyota has the futuristic Aygo, Citroen has given the C1 a smiling front end and the 108 has become the understated option of the three.

It’s a good looking car, though, and arguably less controversial than the others with its slim projector headlights, and a claw-like light graphic at the back. Peugeot is keen to point out the high level of personalisation available, but it really suits subtle tones and the upmarket colour palette Peugeot has selected for its newcomer.

It’s possible to add thousands to the 108 in sticker packs and bolt-ons, but the expected big-selling Active trim comes with most of the equipment you’d ever need. That’s a list which includes the seven-inch touchscreen system with digital radio and Bluetooth connectivity, a height-adjustable driver’s seat and air conditioning, as well as fewer unpainted plastic parts on the outside.

Fleet sales will take a 24% share of the 21,000 108s Peugeot expects to sell in the UK in a full year, and it would be easy to predict that the 55% mix for the 1.0-litre engine will be higher among business users too. It’s an upgrade of the unit used in the 107 and feels more potent than its 68bhp output might suggest, a sensation no doubt boosted by its growly note under load.

PSA also offers a 1.2-litre three-cylinder, producing 82bhp, but despite the extra power it’s not as smooth as the entry-level unit nor is it as efficient. The e-VTI pack for the 68bhp engine – a £250 option – takes CO2 emissions 11g/km below the PSA unit, and with no significant loss of performance it’s definitely the one to have.

Where the three cars differ less is the interior. All three share the same dashboard with interchangeable sections and a seven-inch touchscreen at the centre. Fitted to all 108s except the entry-level Access trim, 95% of UK cars will have this system, which allows smartphone apps to be displayed on and controlled by the screen.  In turn, means navigation is a cheap option and regularly updated too.

The rest didn’t need to change much over the 107. There’s space for four adults inside, with impressive leg and headroom, and the front seats are comfortable enough for long journeys. Peugeot has also upped the luggage capacity from 139 to 196 litres, largely by reshaping the panels in the boot, and the parcel shelf now lifts with the tailgate.

So while the 108 perhaps isn’t as distinctive as its siblings, that’s not always a bad thing. Subtle and stylish, and still an incredibly neat piece of packaging, Peugeot has addressed the old car’s weaker points and very effectively updated them for what’s become a challenging segment over the last nine years.

Verdict:

A practical and understated option in this sector, the 108 works best when it’s not over-optioned. Stick to the lower-powered engine and take advantage of Peugeot’s generous equipment levels, and it’s a great company car for drivers without long-distance needs.