THE Kia Picanto may be produced in South Korea, but it has been designed and engineered with European markets in mind. Continental countries love a good sub-light hatchback and the brand thinks this half-decade-old model is just that.

Although this second-generation Picanto does not arrive on our shores as a new model, it is meant to establish the nameplate ahead of the unveiling of the third-generation model at the Geneva motor show in March 2017. If the local operations can make it work, and sell at least 300 per month as it promised head office, then the nameplate will remain.

The Picanto forms part of Kia’s aim to offer three entry automatic-equipped models for less than $20,000 driveaway – and so the single-spec Si at $14,990 driveaway complements the Rio S at $16,990 driveaway and the Cerato S at $19,990 driveaway. All five doors, all auto, including all on-road costs, just want Australians want.

Its closest auto competitor is the Mitsubishi Mirage, currently the most popular model in the micro segment, priced from $14,250 plus on-road costs.

Another three-cylinder rival is the Suzuki Celerio at $13,990, which at the time of writing included driveaway pricing, while the four-cylinder Holden Spark costs $15,690 or $16,990 driveaway. All offer cheaper manual variants, though.

Month-to-month deals can make or break a competitor in this extremely price sensitive segment, but Kia is the only manufacturer to commit to a permanent nationwide driveaway pricetag.

In some ways it is little wonder the micro segment is caught in a major struggle for sales. Where almost two decades ago a Toyota Corolla cost around the same $20,000 as today, micro cars have crept up in price. The equivalent yesteryear Daihatsu Sirion automatic asked $12,990 driveaway, for example, and it had four ratios, as is the case here.

Today’s $14,990 driveaway Picanto costs only $2000 less than a Rio or Hyundai Accent auto in the class above, which for many may be worth the stretch.

That is unless, of course, the smallest Kia punches above its weight. It certainly does in terms of its body strength, interior ambience and performance.

The Picanto may be a micro car, but it feels strong and mature inside.

Soft-touch dashboard surfaces are lacking at this end of town, but dimpled plastics are consistently matched and silver trim inserts are a neat touch, as are the audio/phone/trip computer controls on the two-spoke Benz S-Class-lookalike steering wheel.

Other quality touches include tactile pop-out cup-holders on the lower console to complement bottle holder in the front doors, a vanity mirror on both front sunvisors, and even auto-off headlights and front footwell lamps.

Only a misaligned glovebox lid and dash-top speaker grilles appear less than ideal. The four-speaker audio quality is awful, even by micro car standards, though the Bluetooth phone and audio streaming is easy to use, despite lacking a touchscreen. A rearview camera is unavailable, but rear parking sensors are standard.

The Picanto betrays its micro car origins behind the front seats, with a bench too close to the floor, forcing a knees-up seating position not evident in Celerio or Spark. Yet headroom for anyone taller than 178cm is compromised, rear door pockets and cupholders are absent, and the boot is tiny.

It may feel solid and strong, but this Kia also feels light and perky on the road.

Throttle response is immediate and the engine feels nippy. The Picanto only weighs 885kg and its 1.25-litre four-cylinder petrol engine produces 63kW at 6000rpm and 120Nm at 4000rpm. Its larger range sibling, the Rio, weighs 1123kg and makes 79kW/135Nm from a 1.4-litre engine.

Both use a dated four-speed automatic, and yet the smaller Kia actually has a stronger torque-to-weight ratio of 135Nm per tonne versus 120Nm per tonne for the larger hatchback.

It helps explain why the Picanto’s drivetrain is more responsive than you might expect, if not quite as sweet as you might hope. When full-throttle performance is called for, the yawning gaps between gears are unavoidable. But when the auto shifts, it is slick and fluent, and there is enough torque in to move the little unit along without asking much of its transmission.

On the freeway, for example, the engine spins at 3000rpm at 100km/h in top gear, enough for it to climb hills without kicking back to third gear.

Economy is not a Picanto forte, however, and in mixed conditions it averaged more than 7.0 litres per 100 kilometres. Its official combined cycle consumption claim is 5.6L/100km, higher than its rivals.

The five-speed manual available overseas would improve driveability, and apparently in these smaller segments up to 50 per cent of buyers choose a DIY-shifter. Kia is counting every dollar, however, and wants to keep things simple where margins are tight. Simply, the manual would have to retail at $2000 less when this auto does not actually cost that amount more to produce.

The Picanto is the only model Kia offers in Australia without a dedicated local steering and suspension tune, but rather it adopts standard European specification. Rolling on 60-aspect 14-inch tyres, the micro hatchback is firm but reasonably refined. The body jiggles about on most surfaces, though control remains tight.

The electro-mechanical steering is lax in terms of its on-centre response and immediacy either side of it, but it improves when a greater amount of lock is wound on and off. More impressive is the playful yet composed handling. This is a fun car to drive, lacking ultimate finesse but always feeling darty and agile within its modest limits. Importantly, unlike the Rio, it feels light on its feet.

More likeable again is the lack of road noise, even on coarse chip surfaces.

Kia was unafraid to let us tackle country roads with the pint-sized Picanto on its national media launch in Canberra, where it proved surprisingly hushed especially by class standards.

In many ways the Picanto does not feel like a cheap micro car, but in other ways it does. Given its pricing leaps towards hatchbacks in the next class up, that is only an adequate compromise.

With a better automatic that would enhance economy, a greater focus on rear packaging and a local suspension tune giving a greater nod to occupant comfort, the next-generation model could be the one definitely worth nabbing for the Kia range.

For now, this Picanto warrants driving a hard bargain because there is still a lot to recommend here. Note the seven-year warranty, roadside assistance, five-star ANCAP safety rating and the buyer-favourite auto and five-door bodystyle, and this tiny Kia could win many friends.