The cute little Fiat 500 has never been a serious choice in Australia, but with the price trimmed to $14,000 driveaway, that may be about to change, says Paul Murrell.

The modern interpretation of the original Fiat 500 (or nuova 500 as it was called) is one of the better retro iterations. On sale in Australia since 2008, it has sold steadily but hardly set the world on fire.

A large part of its problem for buyers was the intimidating price. Now that distribution has come under the Fiat Chrysler umbrella, the high entry price is a thing of the past. According to new Fiat Chrysler President and CEO Veronica Johns, the brand is about to undergo a renaissance. And that starts with a new model (this Fiat 500) at a driveaway price of just $14,000.

When I arrived at Melbourne airport, a cute little white 500 was waiting to be driven to Fiat Chrysler’s new HQ in Port Melbourne. So almost immediately I was buzzing along the freeway at 100km/h, and it reminded me that the refinement of this little car was even better than I remembered. I played dodgeball with the cabs, trucks and white vans and, other than for the 500’s diminutive size, never felt like I was at a disadvantage.

Reacquainting myself with the retro styling brought a smile to my face. Admittedly, interior space is at something of a premium and I thought it best not to think about sexual orientation observations no doubt being made by those I passed.

One little niggle became immediately apparent: the driver’s seat adjustment lever is on the left of the seat (there simply wouldn’t be room for it on the right) and I often mistook it for the handbrake. The driving position is fine, even though I would have liked a reach-adjustable steering wheel and there is definitely an Italian sense of brio in the driving experience. The instrument binnacle is a little confusing, with the tacho a parallel ring inside the speedo and sometimes difficult to read. Power window switches on the console rather than the doors also take a little getting used to, but at least in this car, they can’t be too far away.

It wasn’t until I was talking to the Fiat people that I realised I had been driving the new entry level 500 with 1.2-litre 8-valve engine. Despite a minuscule 51kW, I had pedalled it along and really enjoyed its dynamics. Previously, there were just two models but Fiat Chrysler has expanded that to eight variants in three trim levels; Pop, Sport and Lounge, with a cabrio version of each. And then they told me the entry price had been set at just $14,000 driveaway – when it was imported by Ateco, the cheapest 500 was a tenner under $25,000.

New to the range are the 500 Sport, with a slightly more muscular appeal, and the 500 Lounge. The Sport gets the almost obligatory sports body kit and rear spoiler, Sport function, sports seat with red stitching, flat bottom sports wheel, 15-inch sports alloy wheel (are they trying for a record for the most times they can say “sport”?), larger ventilated front brakes, larger rear brakes, fog light and dark tinted glass. It’s sportier, but won’t win any macho awards.

The Lounge, on the other hand, gets a fixed glass roof “with sun blind”. It also gets climate control air conditioning and believe me, you’ll need it. The sun blind is a mesh sheet that does little to keep the heat out. Even on a comparatively mild day, you’ll be able to cook a roast in there! It might be suitable for a northern European climate, but here in Australia it’s just ridiculous. The Lounge also gets start/stop (just as annoying as it is on any other car), chrome bumper accents and 15-inch multi-spoke alloy wheels. A surprising omission on all 500s is the absence of cruise control.

But it’s the Pop that really focuses attention. It never feels like a sub-$15,000 car. The large body-coloured panel across the dash looks great (especially in lighter colours), the leather-wrapped wheel is chunky and solid, the switch gear looks trendy and modern (very iPod) and there’s plenty to like. Not so nice is the roof lining material that looks like they recycled Grandpa’s long johns (though it’s a lot less awful in black).

Steel wheels with plastic hub caps show where some dollars were shaved. Good news is that all 15 colour choices for the Pop cost the same – no surcharge for metallics. There are two interior colour choices. Although the very pale beige looks great, it may not look so appealing when it shows every greasy fingermark. Red fabric on the seats and funky checked upholstery on the doors add to the ambience and create a fun interior.

There are three engines in the range: the 0.9-litre TwinAir, the 1.2-litre petrol engine and a 1.4-litre petrol engine. I drove all three variants. The 1.2-litre Pop and 1.4-litre Sport models are available with manual transmission or the robotised Dualogic. The 0.9-litre TwinAir Lounge gets only the Dualogic, as do the 500C 1.2 Pop, 1.4 Sport and 0.9 TwinAir Lounge.

The Dualogic is really an automated manual transmission and costs $1500 extra. It’s nowhere near as smooth as a conventional auto and for the best (read: “least offensive”) changes, it pays to lift the throttle before gearshifts. It won’t appeal to everybody and may cost the little Fiat some sales in this segment. The manual change (five-speed in the 1.2, six-speed in the 1.4) is light, quick and a delight to use.

With just 875cc, at first glance the two-cylinder TwinAir sounds like a poor choice, but some really fancy technological wizardry sees it pushing out 145Nm of torque (14Nm more than the 1.4-litre) and earlier in the rev range. The TwinAir is surprisingly effective around town – just make sure Eco mode is disengaged!

PRACTICAL MOTORING SAYS

The new Fiat 500 has the ability to really shake up the sub-light car class, competing with the likes of the Hyundai i20, Kia Rio, Mazda2, Toyota Yaris and VW up! on a purely rational level. Compared to the Nissan Micra, Suzuki Alto, Mitsubishi Mirage and Holden Barina Spark, it offers a much more exciting alternative. It also makes a strong case for itself against the other “retro” contenders such as the VW Beetle and Mini, which are bought more for image than any compelling practical reasons.

FIAT 500 POP

PRICE from $14,000 (driveaway) WARRANTY three-year, 100,000 kilometres SAFETY RATING five-star ANCAP ENGINE 1.2-litre four-cylinder petrol TRANSMISSION five-speed manual, or Dualogic (MTA) BODY 3.55m (L); 1.63m (W); 1.49m (H) WEIGHT 970kg THIRST 5.1L/100km (combined)