If you don't count the 2008 facelift, this is only the second Picanto since Kia made its entry to the city car class back in 2004. Its predecessor was decent enough, but this one is very much better - certainly one of Kia's finest current products and perhaps among the very best cars of its type you can buy.The only thing I'm not sure about is the styling, which strikes me as being over-fussy. Still, at least it doesn't lead to the sort of silliness that has lately become a Kia habit in the matter of visibility. The front and rear pillars are thicker than they might be, but the rear windows are relatively sensibly designed and don't add to the blind spots.Inevitably for a car of this size, rear legroom isn't one of the Picanto's greatest features, but there's a lot more room up front than there used to be, and at six foot three I had no problem finding a comfortable driving position. The boot (which isn't particularly easy to access thanks to the high sill) offers 200 litres of luggage space, rising to 870 litres when you fold down the rear seats.There are two engines in the range, one being an improved one-litre unit. The one tested here, however, is the new 84bhp 1.25, which is both the largest and the most powerful ever offered in a Picanto. A top speed of 106mph and a 0-62mph time of 11.0 seconds may not seem spectacular these days, but the car nips along quite smartly, and I never felt it needed more power than it had.That's partly because the gearing is quite low. The Picanto can burble along quite happily at 30mph in fifth gear, which may not be advisable in many urban situations but helps keep the fuel consumption down.Economy is in any case one of the car's best features. This particular car is the EcoDynamics version, whose ISG stop/start system contributes to a combined figure of 65.7mpg and a CO2 rating of 100g/km. The latter figure is exactly enough, no more and no less, to make the EcoDynamics exempt from Vehicle Excise Duty and the London congestion charge, just as the much slower one-litre models are.And you don't have to pay a great deal up front to save money by these means, as you so often do with low-CO2 specials. The 1.0 Picanto in the same "2" trim level as the test car is only £600 cheaper.In its natural environment, the Picanto works exceptionally well. All the major controls are light to use but precise in operation, and the soft suspension means that it soaks up most of the bumps you're likely to encounter in a town or city. The turning circle is so tight that the need to perform three-point turns is reduced to a minimum.It's worth pointing out, though, that this Picanto is even more compromised towards that sort of driving than the last one was. On the open road, the suspension set-up creates too much body movement, making the car uncomfortable on less than ideally surfaced roads, vulnerable to side winds and occasionally nervous if you turn in to a corner as sharply as the very accurate steering allows you to.This is therefore one of those cars that responds best to a light touch. If you're at all rough in your driving, the Picanto can quickly become rather alarming. And regardless of your technique, that low gearing which works so well in town makes the engine sound quite fussy elsewhere, with 70mph equating to a high-pitched 3000rpm in top.But this is, after all, a car for urban use, and if there has to be a compromise at all I'd rather it was the one that Kia has chosen. I wouldn't particularly want to take it on a long journey, particularly one involving a lot of twisty A-roads, but there's no question that it's very suitable for its intended purpose.To finish, a quick note on safety. Euro NCAP, which has spent the last couple of years giving five-star ratings to the majority of cars it puts through its crash test programme, awarded the Picanto only four stars because Electronity Stability Control is not offered as standard on all models in every market. Kia Motors (UK) responded to this quickly, emphasising that all versions sold here do have ESC fitted, bringing the Picanto up to five-star standard in effect if not fact.It would be a four-star car in any case if tested from 2012 on, because Euro NCAP will then insist on any car having a pedestrian protection score of 60% or better (rather than the current 40%) before it can be given the top rating. The Picanto, at 47%, will fall foul of this, but so will more than fifty other models from a wide range of manufacturers. Engine 1248cc, 4 cylinders Power 84bhp Transmission 5-speed manual Fuel/CO2 65.7mpg / 100g/km Acceleration 0-62mph: 11.0 seconds Top speed 106mph Price £10,195 Details correct at publication date