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Retro car design can be a dangerous thing. It can leave a manufacturer wishing it had moved on rather than looking back. Witness the contrasting fortunes of BMW’s relaunched Mini, which has proved as popular as the original, and Chrysler’s American Graffiti-style PT Cruiser, which was frankly a bit rubbish.

Last year Fiat joined the retro revolution with an updated version of its 1950s classic, the 500. The Italians of course have a flair for style, especially retro style, but even by their standards the 500 was a knockout: a pint-sized supermini that looked cute but not silly and was a blast to drive, whether you were spinning around a square in Rome or a roundabout in Maidstone.

And now there’s a faster, meaner-looking sports version. Called the Fiat 500 Abarth, it goes on sale in Britain early next year and is the most eagerly awaited tiny tearaway since the souped-up Mini Cooper.

Car or myth? The new Fiat 500

An updated version of the unlikely transport of the Latin lover has been met with an outpouring of nostalgia and pride

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• Fiat 500

The name comes from the world famous tuning firm that in the 1950s and 1960s took ordinary Fiats and turned them into racing cars with a formidable reputation. It is Fiat’s equivalent to the AMG division of Mercedes and it has certainly done its job on the 500.

Abarth has added a turbocharger to boost the power output of the 1.4 litre engine from 100bhp on the standard car to 135bhp, chopping the 0-62mph acceleration time from 10.5sec to 7.9sec and raising the top speed to 127mph – enough to comfortably outrun the Mini Cooper. There is even a sport button that adds weight to the steering and increases the torque of the engine for spirited driving, and a light that illuminates to prompt gearshift points for optimum performance.

Changes to the 500’s looks are as dramatic. Sitting half an inch lower than the standard car on fatter tyres, the 500 Abarth has also acquired two intercooler vents in its longer snout, twin exhaust tailpipes, a tailgate spoiler and a rear aerodynamic diffuser. Add the optional 17in wheels into the mix and the metamorphosis from cute corgi into stafford-shire bull terrier is complete.

The real fun of the standard 500, though, was in the driving. Rather than distance the driver from the road and swamp him or her with technology, the 500 offered a viscerally real experience. Speed was real, not a figure on the dashboard. Better still, 40mph felt like 60mph and it was all the more fun for it.

Climb inside the 500 Abarth and fire it up and the omens are good. The engine starts with a growl. Bury the throttle and it pulls hard all the way through the rev range, really getting into its stride at about 3000rpm. There’s no sign of the dreaded turbo lag – the delay between application of the throttle and delivery of the power - so the response is pretty well instantaneous.

However, the 500 Abarth needs to do more than win a straight sprint for the finishing line to entice petrolheads with an eye for style and value. It needs to set the pulse racing at the first sight of a corner. And in that respect it delivers the genuine Abarth experience.

Driving a road car on a test track usually reveals limitations with the handling and brakes pretty quickly. Not so with the 500 Abarth, which pounded around Fiat’s 3.5mile circuit like a car possessed. If the thing were made of flesh and blood you might think it was loving it. This driver certainly was.

Lap after lap, the tyres continued to bite the road surface determinedly and the brakes took a severe beating from speeds of 120mph with only the slightest hint of fade. The electrically assisted power steering has a proper weighty feel to it in sport mode – the right stuff for hard cornering. And with its well tuned front suspension there was no hint of the power overwhelming traction.

Pootling about town is also a doddle. Turn the sports mode off and engine noise recedes, which is important in a car of this size, and while the performance is noticeably less sudden it is still fun to drive between traffic lights. Inside, the black leather seats (an £850 option) adda sense of machismo that is entirely in keeping with the car’s performance, and space in the back is adequate for a couple of regular-sized adults.

Only 5,000 of the 500 Abarth will roll off the production line in the first year and 1,500 of those are coming to the UK. Fiat says inquiries are already piling up, and on this evidence the customers won’t be disappointed.

There’s further excitement to come too: the engine is capable of more power. It is the same unit as used in the Grande Punto where it delivers 155bhp. “We think 135bhp is really enough for a car of this size,” said Paulo Ollino, the technical director at Abarth. For now, that is. Meanwhile, an “Esseesse” (pronounced “SS”) kit will become available some time after the car is launched. Supplied and fitted by a Fiat Abarth dealer, it will raise power to 160bhp. The kit will include other modifications, as yet unspecified. I suggest ceramic brakes, for a start.

Fiat 500 Abarth
ENGINE 1368cc, four cylinders
POWER 135bhp @ 5500rpm
TORQUE 152lb ft @ 3000rpm
TRANSMISSION Five-speed manual
FUEL/CO2 52.3mpg / 155g/km
ACCELERATION 0-60mph: 7.9sec
TOP SPEED 127mph
PRICE From £13,800 approx
TAX BAND D (£145 for 12 months)
VERDICT A brilliant new hot hatch
RELEASE DATE Early 2009

AND THE RIVALS...
Mini Cooper £13,325
ForThe Iconic Mini has style, and has it in spades
Against It lacks the edge in terms of absolute performance
Renault Clio Dynamique 138 S £13,280
For The Clio pedigree, a stable and refined drive
Against Not really as much fun to drive as it should be