The high-performance diesel Mégane is a convincing hot hatch, despite its oil-burning powerplant. A grippy chassis and impressive torque output make it fun to drive, while tall gearing helps long-distance refinement. Impressive fuel economy and low CO2 emissions round off an appealing package. With entry-level models priced from £18,950, the 175 will hold most appeal for company buyers on the hunt for a low tax liability.

Powerful petrol engines tend to be thirsty and dirty - which is why the new breed of high-performance diesel hot hatchbacks is really catching on with buyers.

Renault is the latest to join the fray, and the Mégane 175 dCi is the first model in its high-performance Renaultsport line-up to feature an oil-burner. But is it good enough to warrant the sporty badge?

A diesel might be the sensible option, but the 175 dCi looks every inch the hot hatch from the outside. It retains all of the cosmetic enhancements of the petrol-powered 225 version, apart from the rear spoiler - which is removed to reduce drag. As a result, buyers still get a sharp bodykit and lowered suspension, while sporty twin central exhaust pipes protrude from the rear bumper.

Inside, there are aluminium pedals, heavily bolstered sports seats, plus a smart leather steering wheel and gearlever. Optional Lux trim adds £1,400 to the price (see images of silver five-door), but includes bigger 18-inch alloy wheels, climate control, leather upholstery and Renault's hands-free smartcard entry system.

Under the bonnet, there's a reworked version of the company's 2.0-litre dCi unit, which now packs 173bhp and 360Nm of torque, plus improved throttle response.

Start the engine, and you'll hear a typical diesel rattle, but despite the revisions, throttle response from the highly tuned unit is smooth, without the sudden unsettling rush of power that marks out some other high-output oil-burners. Performance and in-gear acceleration are both notably strong, helping overtaking manoeuvres, while a 0-62mph time of 8.3 seconds is respectable.

There's an admirable lack of snatch through the steering wheel under acceleration, too, while the grippy chassis does a fine job of resisting understeer in bends. Body roll is well controlled, but this does not come at the expense of ride comfort - which is actually very forgiving.

Combined with a tall sixth gear, it makes for impressive long-distance refinement and healthy fuel economy of 43.5mpg. This is exactly what you'd expect from a car aimed at GTi drivers whose company fleet manager insists on a diesel option.

Impressive Brembo brakes keep everything under control, and hardcore buyers will be able to choose the optional Cup trim, which is set to join the line-up this autumn.

Additions which are available for this model include fully switchable stability control, stiffer suspension and figure-hugging Recaro seats.

The changes manage to raise the fun factor considerably, but without compromising comfort. Prices for the Cup pack are unconfirmed, but if you can't wait until then, the standard car still looks the part.