In times of economic hardship it’s little wonder fuel-efficient small cars appeal. But up until recently they have tended to be pretty dull fish; more about getting from A to B than driving fun or innovation. Luckily the new Toyota iQ is anything but. Making the new Mini look big and the old Mini seem basic the iQ is brimming with luxury appointments but at half a metre shorter than the new Fiat 500 (see rivals panel), is still able to fit four people inside.

The iQ’s secret is the clever packaging of its mechanical and electrical innards. At the front a more compact engine compartment means the front wheels can be placed further towards the corners of the car for a shorter front overhang as well as creating more passenger cabin length, while inside the air-conditioning system has been drastically reduced in size. It now fits just behind the centre of the dashboard – previous systems spilled across the back of the passenger side of the dashboard too. Crucially, this means the dashboard can be set back much further towards the windscreen on the passenger side to enable the iQ’s breakthrough ‘3+1’ seating configuration.

As the iQ’s cabin is longer on the passenger side it allows two adults to sit one behind the other, while the other side still allows for a steering wheel and driver, and either a child seat or luggage space behind. In a week’s test with my family I can report it really does work, although being over 6ft I needed to be on the longer passenger side of the cabin when all four family members were inside. My wife being shorter, had her seat pushed further toward the steering wheel and thus allowed more space behind her on the smaller side of the cabin. It’s a genuinely neat solution.

You couldn’t fit the holiday luggage in an iQ but you could manage much of day-to-day family life and a fair amount of short weekend jaunts too.