We like
Engine tractability, fuel economy, ride/handling, comfort

Room for improvement
Cruise control placement, noise/vibration when cold

PEUGEOT thankfully persists with its turbo-diesel HDi versions of the 406 sedan and wagon. For a mid-size prestige Euro import, the HDi Peugeot is stunningly economical and not at all lacking in on-road verve.

It is also well priced, not hugely more expensive than the base 2.0-litre petrol version, and well equipped with alloy wheels, climate control air-conditioning and a trip computer all part of the package.

Underlying all this is arguably the best suspension in its class and a spacious, comfortable interior.

The current Peugeot 406 was revamped in August 1999, mainly freshening up the styling with new front and rear ends (where there is a new boot profile) and upgrading safety with the introduction of new low-impact front airbags (side bags were added a little later), taller headrests to help reduce whiplash injury and new generation Bosch anti-lock braking with electronic brake force distribution. The headlights are better too, using double parabola design with H7 halogen globes.

Inside, the 406 gained a cleaned-up dash with new displays and instruments, more ergonomically correct door panels and a splashing of aluminium on the handbrake lever and ventilation ducts.

The seats were reshaped for better support as well as gaining new trim materials.

The upshot is that the 406, never really wanting for interior comfort, was subtly improved in terms of passenger comfort, complementing the suspension and helping customers feel they have made the right choice by taking the French option when choosing their entry level prestige car.

The instrument panel, apart from a revised instrument cluster with new dials and a relocation of centre console controls with improved HVAC operation, remains essentially untouched. So the view from the driver's seat is pretty much as before, although there is a new steering wheel with press-pad horn operation replacing the previous stalk-operated function.

A neat feature that has appeared on the newest Peugeots is the rain-sensitive windshield wiper system that operates on intermittent mode.

The front seats are comfortable and supportive and there is plenty of adjustment to suit drivers of all sizes. About the only beef from our team was the placement of the cruise control stalk underneath the left-hand indicator stalk.

The back seat is favoured by adequate legroom and well shaped, supportive seats although it is a little narrow when you try to squeeze in three adults.

The turbo-diesel engine churns out what seems like a meagre 82kW but that is supported by an impressive 255Nm of torque that comes in at just 1750rpm. This means the Peugeot is in its best operating range from not far above idle to 4000rpm where its 82kW is developed.

In practice, the HDi responds best if allowed to make use of torque, rather than revs. It will slog away with surprising energy from anything above 2000rpm and does not need much more than 3000rpm before shifting up a gear. Even with a full load on board, it will charge up hills in fifth gear without slackening the pace.

At slower speeds and at idle, the typical diesel clatter does intrude a little, especially when the engine is cold, but is virtually non-existent at cruising speeds.

Partly because it never asks to be revved, but largely because of the fuel efficiency of diesels, the 406 HDi will easily return highway fuel consumption figures better than 5.5 litres per 100km, meaning touring ranges of more than 1200km can be expected. Only one other car in the prestige class - the Citroen C5 HDi - can claim figures like that.

Our test car was a manual, which meant the intrinsic values of the engine were easily exploited. The box shifts smoothly and the clutch is nice and progressive. Remembering the tardy behaviour of the auto gearbox used in V6 Peugeots, we suspect the manual might be the better option for diesel buyers, who are less likely to be tempted by smoothness and luxury than the endearing characteristics of a diesel.

That said, the marriage between turbo-diesels and automatics is usually a happy one, so it could be the diesel is better in auto form than the six-cylinder.

The car steers well even though the HDi gets only the engine speed-sensitive system and not the road speed-sensitive system used in the V6. It is communicative, well weighted and never a problem when parking.

The sizeable Peugeot turns in with crispness, is unfazed by bumps and corrugations and generally feels light on its feet compared to most of its opposition.

And the ride, at first feeling nothing special, quickly shows its mettle with good absorbency, nice pitch control and a lack of underbody crashes and thumps.

The Bosch 5.3 anti-lock braking system, with four-wheel discs and brake force distribution, is always comforting and sure-footed.

With a decent list of standard equipment including twin front and side airbags, anti-lock brakes, alloy wheels, electric windows, CD player, trip computer and cruise control, the 406 HDi is kitted out in the manner to which cars of its class are accustomed.

Back this up with the diesel's economy, excellent cruising ability and high standards of quality and you have a niche within a niche that has a special appeal to Australian buyers who want a little extra character in their European car choice.

Diesel makes a little less sense here than it does in Europe where prices are generally lower than petrol, but it is still hard to argue with a cruising range of better than 1200km from one tank.