ALFA ROMEO this week launched a new entry-level model in Australia – priced more than $5000 below the cheapest three-door 147 model that it now effectively replaces, but considerably more than the Fiat Punto on which it is based.

The Alfa MiTo arrives in local showrooms with a starting price of $31,490 for the base model and $37,490 for the more powerful Sport version.

No automatic gearbox option is offered from launch, but expect a DSG-style twin-clutch ‘manumatic’ to become available within six months as a result of the Fiat Group’s plan to return to the US market with the MiTo and Fiat 500.

Clearly targeted at BMW’s iconic Mini Cooper, the Alfa MiTo is available only as a three-door hatch and is the smallest car to wear the heart-shaped grille since the Alfasud, which disappeared 20 years ago and was replaced in 2000 by the slightly larger 147.

Although officially rated as a ‘Light’ car, the MiTo is bigger in every dimension than the Mini (a ‘Small’ car) and has better performance than the base Cooper, despite only having a five-speed manual rather than six gears.

It almost matches the price of the Anglo-German car, being just $390 more expensive than the Cooper at base level, while the more potent MiTo Sport is priced $2410 below the Mini Cooper S, but has considerably less performance.

Incidentally, the MiTo name links Alfa’s two home cities, Milan and Turin (Torino), and is therefore apparently pronounced “mee-toe”.

Alfa Romeo Australia general manager Edward Butler believes the new MiTo is well-equipped to take on the Mini in the premium compact market, claiming its “keen pricing, evocative heritage and good looks” would make it a genuine contender in a competitive market segment.

“The moment is right to introduce a new sporty compact to the sector,” said Mr Butler at last night’s national media launch.

“Cool, young drivers will relish the choice and excitement that this new model – a real driver’s car – brings.”

Mr Butler said the MiTo’s styling was inspired by Alfa Romeo’s gorgeous 8C Competizione, the company’s fastest production car, and claimed that its equipment and technology features would make it the benchmark in its class.

He said that, whereas the Alfasud was designed to compete in a mass-market, every element of the MiTo placed it in the prestige end of its market segment.

Both MiTo models are powered by the same 1.4-litre turbocharged engine, but in different levels of tune – the base model producing 88kW of power at 5000rpm and 206Nm of torque at 1750rpm, while the version in the MiTo Sport has more boost and a lower compression ratio and produces 114kW at 5500rpm and 230Nm at 3000rpm.

This pushes the two Euro IV-compliant models from 0-100km/h in respectively 8.8 seconds (0.3s faster than the Mini Cooper) and 8.0s (0.9s slower than the Cooper S), while returning combined fuel consumption of 6.1L/100km and 6.5L/100km and emissions of 145g/km and 153g/km.

Surprisingly, the MiTo in base form makes do with a five-speed manual gearbox while the Sport gets a six-speed manual with a consequently higher final drive ratio that still provides a 17km/h higher top speed of 215km/h (10km/h slower than the Cooper S).

Both front-drive models get Alfa Romeo’s three-setting DNA switch, which adjusts the throttle response and steering sharpness, and benefit from a new system called Electronic Q2, which is claimed to simulate a self-locking limited-slip differential by using the stability control system to slightly brake the inside front wheel when accelerating through a bend.

Other standard equipment includes seven airbags, including a driver’s knee airbag, ABS brakes, hill-start assist, air-conditioning, electric windows, cruise control, alarm, 60/40 split-fold rear seats, 16x7.0-inch alloy wheels, a leather-bound steering wheel with audio controls steering wheel and reach as well as height adjustment, LED tail-lights, a trip computer and heated electric side mirrors.

As well as having more power, the Sport model gets 17-inch alloy wheels, automatic dual-zone climate control system, sports seats, pedals and instrumentation, auto-dipping interior mirror, automatic wipers, fog lights and rear parking sensors.

Externally, the Sport is identified by twin exhaust tips, a different lower rear panel, a high-mounted rear spoiler and red Brembo brake callipers that are visible through the bigger wheels.

The MiTo has a number of European small and light-car rivals in addition to the Mini, of course, from the Fiat Punto T-Jet Sport, which shares the same engine and is priced from just $25,990, to the remarkably successful 147kW/280Nm 2.0-litre turbo VW Golf GTI at $38,990.

Other three-door European rivals include (in order of price) the 110kW/220Nm 1.8-litre turbo VW Polo GTI ($26,990), the 128kW/240Nm 1.6-litre turbo Peugeot 207 GTi ($34,490), the 125kW/230Nm 2.4-litre Volvo C30 ($34,950) and the 145kW/215Nm 2.0-litre Renault Clio RS197 ($37,990).

Five-door rivals include the 100kW/180Nm 2.0-litre BMW 118i ($38,900) and the 92kW/200Nm 1.4-litre turbo Audi A3 TFSI ($39,950).