It’s 16 years since the Smart made its first appearance as the ultimate chic urban runabout.

And it’s fair to say it has been a great success. Smart is cute, cheap and fun, especially if you follow the unwritten Smart rule by never driving more than 20 miles at a time and keeping motorway journeys to a minimum.

And although it’s the ultimate Marmite car – people either love it or hate it – the people at Smart have continued to develop new models, such as four-seaters, sports cars, cabriolets and, now, a diesel model.

And I believe the diesel is the best Smart derivative I’ve driven. You might imagine that it would be too slow, considering that progress with the petrol version can be on the lethargic side, but I found this diesel engine fantastic.

It zips along nicely, and the engine feels smoother and more refined than you’d imagine. The fact that it gets more than 80mpg on a run adds to the appeal.

Elsewhere, the Smart is as it ever was. It’s neat, solid, well-built and charming. My only consistent problem with it is the gearbox, which is simply too jerky. It’s impossible not to look like a learner when you set off.

It is a sequential gearbox which has an automatic system, meaning you can flick up and down the cogs or allow the unit to manage itself.

The gearbox works well to get as much power as possible out of a very small engine (less than a litre, in fact, with just three cylinders).

The cdi (Smart has always had a thing about avoiding capitals) looks exactly like its petrol counterparts, save for the discreet badge at the back.

It’s also a very safe car for its size. The fact that the two sets of wheels are so close together means they provide a barrier in a side impact. Smart scored four stars in a 2007 Euro NCAP test.

There is a degree of diesel rumble when it is cold. This is because we’ve all been spoilt by refined multi-cylinder diesel units tucked away under sound-proofed bonnets. In the Smart, the powerplant is under the seats, but it soon warms up and becomes quieter.

As you might expect, the diesel offers a kind of low-down torque. It gives you the short-burst acceleration that you need to get ahead of the pack in traffic.

It’s no fireball of course – the 0-62mph ‘sprint’ takes 18 seconds – but it doesn’t feel that slow behind the wheel. It’s also flat out at 85mph, but that’s certainly enough for town work.

Its compactness is still a revelation, even though there are more small cars out there. It can perform the same parking tricks, diving nose-in to the kerb and also slotting into spaces that wouldn’t accommodate an ordinary car.

But the egg-shaped cabin actually feels quite spacious.

It also offers a barely-there 88g/km of C02, so no road tax or congestion charge, and sitting in insurance group two means it could possibly be the cheapest new car to run. The fuel tank is a tiny 33 litres, but at 85 to the gallon you could still cover 600 miles before having to put another £40 or so of diesel in it.

I must say £12,000 is an awful lot of money to pay for this model, but you can get hard-top diesel Smarts for £9,440, which makes more sense.

Smart Fortwo Passion Cabrio cdi: PRICE: £12,140. What Car? reckon you could get it for £11,667. The Smart diesel range starts at £9,440.

ENGINE: A 0.8 litre diesel unit generating 54bhp via rear-wheel drive.

PERFORMANCE: Top speed 84mph, 0-60mph in 16.8 seconds.

COSTS: 83.1mpg on a run.

INSURANCE: Group 6.

EMISSIONS: 89g/km.

WARRANTY: Three years’ unlimited mileage.

Steve’s Ratings: Performance: 3/5 Ride/Handling: 3/5 Space/Practicality: 3/5 Equipment: 4/5 Security/Safety: 5/5 OVERALL: 4/5