THE light-car segment under $25K is a battleground, which accounts for 10 percent of the Australian passenger car market and Volkswagen wants a bigger slice of it with its new Polo.

But standing in its way are some dominant competitors in the form of Hyundai’s i20, the Mazda2, and Toyota's Yaris - all off which are selling more than double current Polo numbers.

That’s not to say sales for Polo have been bad, actually sales are up 20 per cent year-to-date on last year, partly thanks to discounted pricing on the run-out version.

Volkswagen plans to maintain the increase in sales by cutting the price of Polo further, while attracting more custom with new engines and a higher level of equipment and more safety systems.

The 2014 line-up has been simplified and a diesel variant is no longer available with the highly efficient petrol versions rendering it untenable.

Until a possible GTI version comes along, the Polo range now consists of just the 66TSI Trendline and the 88 TSI Comfortline.

Both have 1.2-litre direct injection four-cylinder turbo petrol engines with the Trendline producing 66kW and 160NM, while the higher-level Comfortline output is 81kW/175Nm.

Volkswagen is offering a special driveaway price of $15,990 on the 66TSI Trendline with a five-speed manual for the first three months after the August launch.

After that the price becomes $16,290 excluding on-road costs and opting for the seven-speed dual-clutch transmission increases the 66TSI Trendline’s price to $18,790.

Stepping up into the 88TSI Comfortline comes brings a price tag of $18,290 for the six-speed manual and $20,790 for the seven-speed DSG.

Volkswagen has been careful to align entry-level Polo prices with its main rival's base variant price-tags with all The latest pricing puts the high-end Polo variants into the same shopping basket as top of the range competitor offerings, including Hyundai’s i20 Elite (automatic) for which tops out at $19,590, the Mazda2 Maxx Sport (automatic) for $18,580 and Toyota’s Yaris YRX at $21,390.

But Volkswagen has also been careful to align entry-level pricing with the lower end of the competition range too, with Yaris YR at $14,990, Hyundai i20 Active $15,990 and the Mazda2 Neo Sport for $15,790.

Standard features on the 66TSI Trendline include automatic idle-stop function, air-conditioning, cruise control, twin halogen headlights and LED running lights, remote power windows, heated mirrors with LED turn indicators, flat-bottomed steering wheel, height adjustable driver seat, variable luggage floor height, chilled glovebox and full-sized spare wheel.

The 88TSI Comfortline gets all of the above plus 15-inch alloy wheels, front centre armrest, phone and audio controls on the steering wheel, height adjustable front passenger seat, multi-function trip computer and ‘comfort’ cloth upholstery.

Standard in both grades is Volkswagen’s latest infotainment system with five-inch proximity touch screen, Bluetooth connectivity and music streaming.

The first car we sampled at the Polo’s Australian launch was the 66TSI Trendline with the five-speed manual gearbox.

As we walked up to the car it was hard to tell what’s changed to the exterior in this revision of the Polo.

While the sheet metal is the same, the front bumper has been redesigned with a chrome-effect strip added to the lower air-intake, and the rear bumper too has been given a tweak with new taillights added.

The Polo is refined looking car, but possibly too conservative for a segment with young people in its sights.

Inside, the cabin oozes a premium air and the Trendline seats appear to be well sewn together, offering good support and comfort.

The flat-bottomed steering wheel is the same as current Golf and even the plastic-surface version in the Trendline has pleasing fit and feel to the touch.

The refinement extends through the cabin from the updated instrument cluster , centre-console, infotainment system and touch screen through to the rear seats.

In the rear, legroom is helped by the thin-backed front seats, although anybody taller than 185cm will find space tight, and headroom is good for a car of such diminutive proportions.

Our drive route weaved its way north out of Brisbane’s CBD inland along country roads and even in peak-hour traffic the five-speed manual in the Trendline was easy to use.

The clutch is light, the shifts are easy and we saw good ergonomics - particularly with the rounded gear-knob, which fits the palm of your hand comfortably.

As we left the city behind and hit the freeway, the Polo could stretch its legs and at 100km/h feels stable. Another gear would have been good, but fifth still happily handles this speed at about 2200rpm.

The Polo’s ride on the freeway was excellent on its standard 15-inch steel wheels and only a little wind noise interrupted an otherwise smooth ride.

On more rural roads the ride remained composed even over shoddy surfaces and a few twisty bits also revealed good handling from the Polo, which sits on the PQ26 platform with MacPherson strut suspension up front and a torsion beam at the back.

Faced with increasingly hilly terrain the 1.2-litre 66kW/160Nm turbo four driving the front wheels hauled us up with ease.

It was then time to drive the 88TSI Comfortline with the DSG automatic transmission.

In this variant the cabin in the Comfortline feels even more refined and the excellent steering wheel is leather clad with gloss-black spokes.

Other premium touches like chrome-effect trim strips to the doors and air-vents, and air-conditioning controls are also more sophisticated with a digital temperature setting in the Comfortline.

More country roads proved the 88TSI Comfortline with its standard 15-inch alloy wheels handled and rode just as well as its Trendline sibling, but the extra power and torque made for even more fun.

Its turbo winds up quickly withl a little slingshot effect to it and while the torque remains the same as the previous model Polo, it sits 150 revs lower at 1400rpm - where you want it.

The seats in the 66TSI Comfortline are also cloth, but feel a little more special with a tartan-style pattern, but with the same comfort and support.

While the seats are height adjustable, taller drivers could have difficulty setting them low enough – a potential problem in the Trendline too.

The upgrades which allowed the installation of the new infotainment system also meant other technological advances could be made, including the new electro-mechanical steering now standard in all Polos, resulting in much lighter and direct steering.

Extra safety systems have been added, too. Multi-Collision Braking prevents the car rolling away after a crash, and the Comfort Package, which is offered on the Comfortline for $1500, adds VW’s Drive Fatigue System, City Emergency Braking, reversing camera and adaptive cruise control.

The road home gave us the opportunity to sample another 88TSI Comfortline with the Comfort Package and the Sport Package optioned.

For $1500 the sports pack brings 17-inch alloy wheels, lowered suspension and front fog lights.

The ride does become compromised with the larger diameter wheels and less tyre wall, but that’s the price you pay for more sporty looks and better handling, which combined with a lower ride-height made cornering flatter and more enjoyable.

Disappointingly, satellite navigation is not included with any of the packages and after a momentary loss of direction a phone was required to pick up the trail again.

Back on the right track, it was relieving to switch on the adaptive cruise control for the freeway drive back in afternoon traffic.

For the money and kit that comes with it this updated Polo is the best ever, whether that is enough to take on and beat its light-car segment rivals remains to be seen.