BMW 116d ED

Driving thrills and superb economy rarely go hand-in-hand, but the BMW 116d ED delivers both in a classy and understated fashion. Costly options make it the most expensive car here, but it also has the best residuals and lowest running costs, plus its interior is surprisingly practical.

The latest BMW 1 Series has become the class benchmark for any premium hatchback to beat. We were so impressed by the low-CO2 EfficientDynamics model that it scooped one of our coveted New Car Awards. However, this success could prove short-lived, as the V40 is the first of several talented new rivals set to appear over the next few months.

The 116d gets off to a shaky start, too, as it doesn’t have the visual impact of the curvy Volvo. While the updated exterior design is a step up from the previous model, the clean, simple lines are smart rather than stylish. Big light clusters front and rear, plus a trademark silver kidney grille, mean the BMW looks more aggressive than the VW, but the one detail that matters most to a lot of company car buyers is the blue and white propeller badge.

BMW’s brand strength is a powerful selling point, but the 1 Series still needs to back that up with quality. Fortunately, the interior doesn’t disappoint. The 116d ED has similar equipment to the identically priced, mid-spec SE model, so essentials like Bluetooth, air-con and all-round electric windows are in place.

But if you start adding extras like cruise control and rain-sensing wipers in order to match the V40’s spec, the purchase price soon stretches beyond the Volvo’s £21,345.

And while it has a more conventionally laid-out dash than the Volvo, the BMW still seems well made inside. All the major controls have a high-quality look and feel, and the iDrive controller is much easier to use than the Volvo’s button-heavy Sensus set-up.

The 1 Series has a much lower driving position than either of its rivals here (our car came with the optional £395 sports seats), plus its dash is angled towards the driver. And unlike in the V40, the BMW’s pedal positions are almost perfect. A narrow rear screen reduces rear visibility, but in almost every other area, the 116d ED is very practical.

With the rear seats up, its 360-litre boot is the biggest on this test, and touches like the massive door pockets are extremely useful. However, if you plan to carry passengers regularly, bear in mind that the BMW has the least legroom here. Also, the high transmission tunnel means the middle rear seat is really just for kids.

Yet despite its extra focus on versatility, the 1 Series hasn’t forgotten its sporty roots – and as a result the 116d ED is a cut above the Golf and V40 when it comes to driving dynamics. It beat the Volvo from 0-60mph by over a second (taking 9.9 seconds in total), yet it has no big power advantage.

The beautifully balanced rear-drive chassis offers a level of poise that neither rival can muster, while the well weighted steering and responsive throttle will delight keen drivers.

Better still, it returned the best economy on test (47.4mpg), while fixed-price servicing and strong residuals make it a solid investment.