Volkswagen, the maker of the “people’s car”, was getting left behind in the battle of low-budget motors. For years it presented the VW badge as the symbol of an upmarket brand, commanding a 10% price premium over the Fords, Vauxhalls and what-have-yous. That hasn’t worked with the smallest and cheapest models.

It had looked as if VW would give up the lowest price class in favour of its associate brands Seat and Skoda. Its last attempt, the Lupo, created by cutting the back off the Polo, was not a success. The accommodation was tight, the cost saving minimal and the price too high.

The Fiat Panda introduced in 2004 showed that a cheap car need not lack comfort, safety features or driving pleasure and could be big enough for four adults. Last year a joint venture between Toyota and PSA Peugeot Citroën gave birth to the Citroën C1, Peugeot 107 and Toyota Aygo: even smaller cars with Panda attributes.

The starting price for a thoroughly modern mini car became £6,500. To make business sense that meant building cars outside western Europe in an area of low manufacturing costs: the Panda is made in Poland, while Toyota and Peugeot Citroën set up in the Czech Republic. Volkswagen looked around its empire and identified its factory in Brazil as a likely place to source its cheapest car for Europe. Enter — from April in the UK — the Fox.

The VW Fox, from £6,595, is the largest of the small car pack, a foot longer than the Panda and the Lupo it replaces. It is only 3in shorter than the VW Polo (£7,495) that it resembles and with which it shares its engine. Indeed, the Fox would seem almost to make the Polo superfluous. Even at the entry-level it has power steering, ABS, twin airbags and a radio/CD player. For another £800 the higher specification version called — would you believe? — Urban Fox, has a body-coloured bumper and mirrors, electric windows and remote-control central locking.

I drove an Urban Fox with a 54bhp 1.2 litre three-cylinder petrol engine. This is barely adequate for the Polo but feels a bit more lively in the lighter Fox, even if, with a 0-62mph time of 17.5sec, it is still one of the slowest-accelerating new cars available.

The Fox’s handling, steering and braking are typical of small Volkswagens (with the exception of the GTI models): safe and sure but not much fun. A Panda is more entertaining and the Aygo and its French-dressed sisters are quicker and have sharper reactions.

This car is less about charm than practicality. It is taller than the Polo and you sit higher, which makes better use of the cabin space and gives room for sliding storage bins under the front seats. The rear seat slides forward 6in to increase the boot area and also double folds to provide a cubic metre of load space. But be warned: although it is spacious, the Fox comes only with three doors and the rear seat is arranged for two rather than three passengers.

The instrument panel is intriguing in its simplicity. Arcs for the rev counter and fuel gauge peek out from the sides of the large speedometer and are flanked by warning lights.

The Fox doesn’t look or feel as if it has been built down to a price. Despite its Urban name tag it isn’t just a city car, but for anyone anticipating regular long journeys, the 74bhp 1.4 litre four-cylinder engine would seem a better bet. That adds £600 to the price.

The VW Fox isn’t cunning. What you see is what you get: an honest, inexpensive car, more spacious and more practical than most of its type, that has the lowest group 1 insurance rating — and holds no promise for the driving enthusiast. But it is also something I thought had disappeared: a Volkswagen that lives up to being a people’s car.

Model Volkswagen Urban Fox 1.2
Engine type 1198cc, three cylinders
Power/Torque 54bhp @ 4750rpm / 78 lb ft @ 3000rpm
Transmission Five-speed manual
Fuel/CO2 46.2mpg (combined cycle)
Performance 0-62mph: 17.5sec / Top speed: 92mph
Price £7,395
Verdict Spacious, practical and relatively inexpensive
Rating 2/5

THE OPPOSITION

Model Fiat Panda 1.2 Dynamic £6,995
For Fun to drive, five doors mean easy access
Against Trim quality, less space in a smaller package

Model Citroën C1 Rhythm £7,345
For Tiny tot with cheeky personality. Easy to park
Against Noisy engine, limited luggage room

Explore Driving

• Jeremy Clarkson

• New Car Reviews

• Used Car Reviews

• News

• Features

• In The Showroom

• Buying Guide

• Car Clinic