We like
Sharp pricing, reversing camera standard across range, excellent front and rear leg room, massive boot, more refined styling, fuel efficiency

Room for improvement
Sat-nav only for iPhone, cramped rear head-room, too much hard plastic throughout cabin, cheap cloth seats on top-spec VTi-L, noisy engine when pushed

LIFE can be brutal in Australia's light car segment, with the competition getting tougher each year and car-makers consistently improving the quality of their product at the lower end of the new-car market.

Think the Ford Fiesta, Fiat 500, Kia Rio and the recently launched Renault Clio.

While year-to-date sales in the segment are down by 15 per cent so far in 2014, the market share is still a sizeable 9.5 per cent in the same period, making it the fifth most popular segment in Australia behind small cars, large SUVs, mid-size SUVs and 4x4 utilities.

Out of the 110,000-120,000 light cars sold in Australia each year, just 10,000-12,000 of those are sedans. But Honda sees potential for growth with its new-generation City and believes the Thai-built contender is a strong enough proposition to draw people back to its dealerships and boost the company's overall sales.

Good thing that Honda has made improvements across the board to the new model compared with the outgoing version, including to the suspension, NVH (noise, vibration and harshness) levels and connectivity.

For starters, the design is more complete this time around. With a lower stance from the front and sharper lines, the City is one of the more attractive light sedans in a segment that is home to some cars that feature designs only a mother could love. The Nissan Almera, anyone?From the rear, the tail-lights have an almost a BMW 3 Series look, while the bold front-end styling is unmistakably Honda, although some punters might be put off by the enormous chrome strip running along the centre of the grille.

This is Honda’s latest design language called “solid wing face”.

Pricing has shifted a little as Honda prepares to push the City harder than it did the first time around in 2009.

For $15,990 excluding on-roads – down $500 from previous model – you can get into the base VTi with a five-speed manual gearbox. Optioning the new Earth Dreams CVT adds $2000 which, by our calculations makes it one of the most affordable cars in its segment behind the booted Holden Barina which kicks off from $15,490 plus on-roads or the much cheaper Proton S16 from $11,290 drive-away.

Within its own stable, Honda’s larger Civic sedan starts at $19,490 for the base VTi before rising to $23,290 for the VTi-L which is only $1900 dearer than the City. This could prove to be quite the conundrum for potential buyers of either model.

For your hard-earned, the VTi has some surprising gear on its standard features list, including a three-mode reversing camera, Honda’s Display Audio system – as seen in pricier stable-mates such as the Odyssey MPV – which includes a tablet-esque seven-inch touch-screen with vehicle information, customisable wallpaper, MP4 movie player and Bluetooth connectivity.

Kudos to Honda for including this as standard in the base model. It also fits with the vehicles demographic which is younger (up to mid 30s), predominantly female urban-dwelling drivers.

It also features sat-nav via a smartphone app and an HDMI cable, but at this stage the only smartphone that can be used is an Apple iPhone. An Andriod version is apparently in the works, but anyone with anything besides an iPhone would need to look into other navi options.

Standard hill-start assist, six airbags including curtain and emergency stop signal under heavy braking give the City a head start in the safety stakes as well, but it is yet to be crash tested by ANCAP.

The cabin in the base model features a layered dash with silver inserts breaking up the hard black plastic, while the touch-screen integrates nicely in the centre stack making for an attractive, clean design that eschews the fussy look that can occur when there are too many controls.

The black cloth trim on the seats is also featured on the front centre arm-rest and the door panel inserts, but Honda has chosen to stick with the hard plastic for the door arm-rests.

These seats offer an adequate level of support but feel a touch too cushiony for our liking. However, a good driving position is super easy to find and the City has a height and reach-adjustable steering wheel which some cars at this end of the market do not have.

Leg and head-room up front is generous and rear-seat occupants will be surprised at just how much leg room they will have in the City, even with the front seats pushed back.

What they may have an issue with is the head-room in the rear which is fine for anyone less than 150cm tall (or about five feet)l, but it gets a little cramped for passengers around the 183cm (six-foot) mark.

Eight cup holders, reasonable amounts of storage and 12-volt chargers (two in the VTi, four in the VTi-L) mean front and rear occupants are fairly well catered for. The aforementioned Display Audio is not only a breeze to use but looks a generation ahead of similar systems we have used.

An area where the City is practically unbeatable is its enormous boot. With 536 litres of cargo space, the City is a capable little hauler that can carry more cargo than cars two segments bigger, such as the Holden Commodore. The rear seats also fold down via a lever in the cargo area, but once folded they sit much higher than the floor of the boot which could impede larger loads.

To the flagship VTi-L which retails for $21,390 – a $900 increase over the previous model – and adds a leather-appointed steering wheel and gear-shift lever, fog-lights, a boot release button on the boot and climate control.

Honda has chosen to keep the same cloth trim for both grades which is a little disappointing, but has added more silver brushed-metal look inserts to the top-spec version as well as chrome door handles, eight-speaker stereo and push-button start.

The leather-appointed steering wheel adds a touch of luxury, but the cabin of the VTi-L does not feel any more premium than the base variant.

Honda has carried over the 88kW/145Nm four-cylinder petrol unit from the outgoing model, albeit with tweaks for improved efficiency and performance.

There is no 0-100km/h time available for the City so we cannot reveal official figures, but judging by its in-line performance we suspect it would be somewhere well north of 10 seconds.

The 1.5-litre unit under the bonnet lacks grunt, but the City is unlikely to be driven hard or particularly fast, so in that sense the performance is adequate and in keeping with its rivals.

Putting your foot firmly on the accelerator generates a noisy roar from the engine, but the CVT has a noticeable lack whine common with these transmissions, thanks to the smooth new Earth Dreams unit.

If you are simply cruising around town and not accelerating heavily, the City offers a relatively quiet ride which is also due in part to the use of high-density sound absorption materials between the cabin and engine bay as well as other improvements to NVH levels.

Changes have been made to the suspension, including lowering the roll centre height of the front MacPherson struts, while the torsion beam rear suspension has been raised for a more stable feel.

The damper tuning has also been tweaked, with the City offers a well-balanced ride over various road conditions with large obstructions such as rubber speed humps the only thing that really challenged the comfort levels.

The City is not the car to throw around corners, but the many roundabouts and twists on our Canberra city test route proved that the little sedan was capable enough, with ESC controlling any slippage.

Honda offers 15-inch steel wheels on the VTi which momentarily lost grip once or twice after some overly enthusiastic cornering, but the 16-inch alloys on the VTi-L felt like a good match for the car.

We could not match the official fuel consumption figure of 5.8 litres (CVT) per 100 kilometres on the combined cycle after our brief stint in the City, but we managed 6.2L/100km which is not far off.

For a city car, the City offers excellent levels of cabin and cargo space, the latest technology and safety gear, generous levels of standard equipment, good looks, excellent fuel economy and all at an appealing price point.

Honda is offering a great package in the City and while it won’t win any performance car titles, it looks set to give the Japanese car-maker some real fire-power in the light car segment.