JUST weeks after it was named European car of the year, Peugeot's 307 small hatch has gone on sale in Australia, replacing the iconic 306.

The 307 is available in five-door form only at this stage, powered by a choice of 1.6 or 2.0-litre petrol engines or - in the true Peugeot oil-burner tradition - a 2.0-litre turbo-diesel.

Pricing kicks off at $25,990 for the 1.6 five-speed manual, climbing to $29,990 for the HDi diesel and $31,490 for the top-spec 2.0-litre.

A Porsche-style Tiptronic four-speed automatic is a $2200 option for the petrol variants with 1.6-litre auto supplies due before Christmas, while 2.0-litre auto buyers will have to wait until the first quarter of 2002.

The keen pricing not only puts fellow Europeans like Volkswagen's Golf in the 307's gun-sights, but the French manufacturer says Japanese aces like Honda's eerily similar Civic Vi, the Subaru Impreza hatch, Toyota Corolla Seca Levin and even the Mazda 323 Astina SP20 are logical competitors.

Based on an all-new platform, the tall-boy design with its drooping nose is a big change from the hunched pocket-rocket shape of the 306, not only being significantly taller but also wider and with a longer wheelbase.

It is heavier too, the forthcoming 2.0-litre auto weighing in at a porky 1313kg, while the lightest is the 1.6 manual, which is still 1193kg.

The weight gain is understandable, not only because this is a physically bigger car but also because there is a lot of standard equipment on board.

Particularly impressive is the amount of safety gear, including six airbags - front, front-side and curtain - anti-lock brakes with electronic brake force distribution and emergency brake assist, anti-whiplash front seats and lap-sash seatbelts and headrests for all five passengers.

Comfort features include power windows and mirrors, climate control air-conditioning, audio system with CD, height adjustment on the front seats, trip computer and remote central locking.

The 2.0-litre petrol adds 16-inch alloy wheels, body coloured bumper rub strips and side mouldings, rain-sensing wipers, front foglights, automatic headlight illumination, rear centre armrest, five-CD stacker and leather steering wheel, gear knob and gear lever. Cruise control will be available from mid-2002.

There are numerous storage spaces, including an air-conditioned glovebox, as well as a high degree of versatility. The split-fold rear seats can be raised upright and leaned against the front seats, or they can be lowered horizontally to create a flat floor.

Luggage capacity is rated at 341 litres with the rear seats in place, or 1328 litres with them folded.

Mechanically, the 307 is less radical than its shape may suggest. All three engines are already seeing service in the Peugeot range here. The 80kW/147Nm 1.6 in the smaller 206, the 66kW/205Nm diesel in the 306 and 100kW/190Nm 2.0 in the larger 406. Both petrol engines use more expensive premium unleaded.

The MacPherson strut front and torsion beam rear suspension is an uprated version of the 306's set-up, the steering is by rack and pinion with variable hydraulic electric pump assistance, brakes are ventilated discs at the front and solid items at the back, while the engine sits transversely and drives the front wheels in the classic small car layout.

The new Australian distributor, Peugeot Automobiles Australia, is bullish about the 307's prospects, forecasting 2000 sales in 2002, with the 1.6 claiming 1000 of those, the 2.0 700 and the diesel the remaining 300.

DRIVE IMPRESSIONS:

THINK 306 and you think scalpel-sharp steering, limpet-like grip and thrill-a-minute motoring. Only the seating position pained the driver. Getting comfortable for many of us was a gymnastic challenge beyond the adjustability of the little Pug.

The good news is the latter problem has been banished from the 307. Height and reach adjustment of the steering wheel, height adjustment of both front pews and a commanding driving position fronted by a vast stretch of glass ensure comfort and a tremendous viewing platform.

The rest of the passengers benefit from the expansive new design too. There is plenty of knee, head and elbow room front and back for four adults, plenty of comfort from the seats, plenty of places for magazines, CDs, drinks and phones. This is as versatile as the 306 was not.

But the 307 is not as focussed on the dynamics as the 306 was either. Being bigger, heavier and taller, it lacks the nimbleness and chuckability of its predecessor, replacing it with a solidity of build and quietness you could only imagine in the old car.

But the most outstanding feature remains Peugeot's mastery of ride. The drive program over nasty, rutted and pot-holed bitumen and gravel north-west of Sydney highlighted the 307's ability to master the worst of conditions. Imperturbable is the word that springs to mind.

Of the three cars, the 2.0 seemed to be the pick with enough power to overcome the weight, that little more luxury inside and a noticeably quieter ride thanks to the less aggressive cut of its Dunlop tyres compared to its brethren.

The 1.6 was earnestly enthusiastic rather than outstanding while we have sampled more powerful and flexible oil-burner's than this HDi, including from Peugeot. Hopefully, when our diesel fuel quality improves in 2003 we will see better engines.

We only had the chance to sample the engines mated with the manual transmission, which was a slick and smooth shift and not geared too tall, as some small European cars have been. Hopefully, auto performance will not rob too much edge, as there is not a huge amount to spare.

Another note of concern was the build quality of some of the cars sampled, with several rattles and squeaks emerging on the rough roads, as well as reports of loose interior fittings. Hopefully, that's not indicative of overall build quality.

The 307 beat some pretty impressive competition to win European car of the year - the new Mini, Jaguar's X-Type and the aforementioned Civic - and it has been selling well since its European debut last May.

It will be interesting to see if 307's Euro credibility and sales success translates to Australia, where an audience weaned on the 306 will have some adjusting to do.