It is with pleasure and no little relief that I can reveal that, for the first time in many years, I have just had fun driving a Peugeot. Yes, this new 207 GT was helped by some of the best roads in Europe and though I did not step from the car and look skyward as one who’d been afforded a glimpse into the future, I did sense that Peugeot had turned the corner.

It doesn’t look much different from the standard and rather disappointing 207 but beneath those already strong lines the car has been thoughtfully tuned to a more sporting brief. Its suspension has been firmed up at the back and there are convincingly chubby 205/45 section tyres on 17in wheels to help give it that roller-skate feel in the corners. But the real difference is under the bonnet, where you’ll find not a merely modified engine but a new one.

Some indication of the quality of this new motor is found in the fact that it was a joint development between PSA (the company that owns Peugeot and Citroën) and BMW. Indeed this engine is in the new Mini to be launched next month.

It’s a four-cylinder 1.6 litre unit with a clever new type of turbocharger that, combined with a high compression ratio, means the engine has the fuel efficiency of a small unit while packing the punch of something rather larger. Also, unlike most petrol turbo engines, the 207 pulls well from little more than idling revs and suffers almost no lag, so you never have to second-guess when the power’s going to arrive.

Even so, the 207 GT is no guided missile. It develops 150bhp, which frankly the engine could almost have achieved without a turbo. The power is enough to propel it to 62mph in 8.7sec and on to 131mph. That’s good but not spectacular and explains why there is no “i” on the end of “207 GT”.

Peugeot is keeping the 207 GTi tucked away until next spring when the engine will be uprated to a more exciting 175bhp. With a six-speed gearbox and further chassis enhancements, it will attempt to follow in the faded footsteps of the 205 GTi, the car rightly regarded (with the original Golf GTI) as being one of the two greatest performance hatchbacks in history.

But great hot Peugeots have never been about straight lines. The biggest-fun hatchback I ever drove was a long-forgotten roadgoing rally special made only in left-hand drive by Peugeot in 1988. The 205 Rallye had an engine of just 1.3 litres and what made it great was it changed direction like a flyweight dodging a right hook.

The 207 GT weighs half a ton more than the Rallye did, so don’t expect it to do the same, but it corners fluently and at impressive speed. And while the relationship between car and driver is hardly telepathic, there is a level of interaction there that lifts it clear of Peugeot’s other failed attempts to make a decent driver’s car.

Indeed I drove it as hard as was safe through southwest France for four hours and would have been happy to have done more. The only things that annoyed me about the 207 GT were some rather cheap dashboard plastics and the fact that the near full-length glass sunroof is obligatory. I’d rather have a few hundred quid knocked off its £14,345 list price.

Does this mean that Peugeot is back in the fun car business? Perhaps, but we should not get ahead of ourselves. Frédéric Saint-Geours, Peugeot’s managing director, told me that the 207 GT “is not a sporty car”, adding that firebreathing hot hatches like the 2 litre 197bhp RenaultSport Clio were best saved for the track.

Even so, with the 207 GTi still to come, Peugeot is taking steps in the right direction. Next year it will return to the Le Mans 24-hour race for the first time since it won it twice in a row in 1992-93. It may be that it has decided making safe, cute cars is not quite enough these days. Perhaps one day Peugeot will return to producing the kind of cars that once made it the automatic choice of anyone with a limited budget and some blood in their veins.

THE OPPOSITION

Model Ford Fiesta ST £13,595
For Great fun on the track, gutsy 2 litre engine
Against Not so great on the road, dull to look at, thirsty

Model Renault Clio 1.6 Dynamique S £11,210
For Good looking, smart interior, well built, safe
Against Sluggish performance, dull to drive