Depending on the flavour you choose, it’s a design as suited to city living as it is to the needs of a mountaintop farmer. It can be a hot hatch – or eco-conscious transport for Friends of the Earth. It can be a second vehicle for older empty-nesters. Or the sole car for a rural family. Less a citycar.

This is the Italian brand at its very best. The MK2 design dates back to 2003, but other small cars are only just getting round to matching its astonishing efficiency of space. And just as they do, along comes this MK3 model, longer, wider, taller, more efficient and in every way cleverer than before. Functional, solid, intelligent and free spirited, it’s still, we’re told, a car that thinks outside the box.

Shouldn’t a car that thinks outside the box have an engine designed to do just the same? The innovative petrol TwinAir is an engine with just two cylinders, the kind of thing likely to generate about as much power as the average sit-on lawnmower. Yet in the turbocharged version, there are eighty five braked horses on tap, sufficient if you rev the thing pretty hard, to see sixty blow by in around eleven seconds on the way to an academic maximum of 110mph. And it’s that pulling power you really appreciate in the nip and tuck of city traffic, peak torque arriving low in the rev range courtesy of clever TwinAir technology that allows the engine to breathe more easily. The result is that you’ll find yourself palming the high-mounted gearlever around less often than you might expect.

For budget petrol people, Fiat also makes a 65bhp normally aspirated version of this unit, this may be an older engine but it’s still a willing and free-revving one with performance (0-60mph in 14. 2s on the way to 102mph) that’ll be quite sufficient for most drivers. It’s also a fair bit quieter, particularly at idle, than the TwinAir, something a number of drivers may prefer. To be honest, even the diesel Panda is more refined than its TwinAir alternative, the diesel in question being a 75bhp 1. 3-litre Multijet 16v diesel variant, which on paper matches the TwinAir’s frugality but in day-to-day reality, probably betters it. It feels faster through the gears than the performance figures (sixty in 12. 8s on the way to 104mph) might suggest.

Aside from engines and performance, there’s plenty else for previous Panda people to appreciate in the third generation design. For a start, there’s much more of a ‘big car’ feel to the way that it drives, thanks to suspension tweaks, greater torsional stiffness and a wider track. The result is that it turns into corners more sharply, rounding them with far less bodyroll than before, an experience aided by greater sensitivity from the electric power steering. It’s a great deal quieter than before on major routes at cruising speeds too.

There’s was something of a feeling of tiny MPV about the previous generation version of this car. There still is. It remains a tall car, with a vertical tail, a five-door-only shape and a large glass area, bigger than before (slightly longer, wider and taller) but sat upon the same wheelbase, so the roadway footprint remains basically unaltered. As for the friendly new look, it’s based upon what Fiat’s designers call ‘a squarical’ theme, rounded rectangles in vogue everywhere from the headlamps to the front air intake, from the wheelarches to that trademark extra third rearward side window.

The squarical touches continue on the inside. You’ll find them in the instrument binnacle, on the steering wheel boss, the ventilation controls on the centre console – even on the seats where embossed rounded squares are there to better help air circulate between your body and the backrest. The dashboard itself is enveloped in a colourful frame of your choosing with a roomy storage pocket in front of the front passenger supposed to evoke a nod towards original Eighties Panda motoring.

Overall then, a cabin of much higher quality than before – far nicer indeed, than you’d expect a car of this class and price to provide. There are no fewer than fourteen different storage compartments that are apparently dotted around the cabin.

Loved by small car people the world over for more than thirty years, the Panda continues to define everything that a very compact multi-purpose model should be. It’s had to evolve of course, with more efficient engines and clever technology. But its heart remains simple, functional and innovative. Which is why, while other citycars will please only citycar folk, you could imagine this one being driven by…. well, just about anyone.

It’s got tough competition these days, no question. But in a growing segment full of talented offerings, it’s a key contender you just can’t help liking.