Luxury tends to be associated more with large cars, and there are a lot of drivers who want something special but in a small package.

Cleverly Peugeot has spotted this niche in the market and decided to tap into it with it’s new 208 XY, the “epitome of urban chic” as the promotional blurb tells you.

The XY is the most luxurious model in the Peugeot 208 range and really is a classy little number.

It’s packed with a host of premium features both inside and out which make it stand out from the crowd.

For starters the car in only available in three colours – Nero Black, Purple Night and Twilight Blue – each of which is set off by the liberal use of chrome embellishments to make it especially eye catching.

Add to that some very sexy 17 inch diamond-Anthro Mercure alloy wheels and body-coloured wheel arch extensions and the XY almost sells itself.

But if the exterior is good the interior is even better. There’s superb full leather upholstery with driver and front passenger enjoying almost armchair like seats which great all round support. There’s a matching leather armrest and the traditionally small 208 steering wheel is also finished in quality leather.

But no matter which seat you sit in you look up to enjoy a full panoramic tinted glass sunroof, complete with sun shade and blue strip lighting down each side.

Other standard features include satellite navigation with full colour touchscreen, rear parking sensors and DAB radio.

There are of course some negative features to the XY.

For starters it’s only available as a three-door rather than a five- door, which means it can be a bit awkward getting anyone large into the rear seats.

And secondly the price. While the entry level 208 is just under £10,000 the XY model I tried was more than £17,500.

The Peugeot 208 XY
The Peugeot 208 XY

It actually feels like a very up market, luxury small car rather a 208 with a lot of extras thrown at it.

And it’s not all about looks. Small cars can be a little skittish on tight bends at speed but not this one. It’s road holding instilled confidence while its lively nature made it a very enjoyable drive, no matter what sort of road I travelled on.

And the ability to accelerate from standstill to 62 miles per hour in just a whisker over seven seconds makes this model very lively indeed.

Combine that with the luxury that the XY offers and you have a very enticing package indeed.

The best things come in small packages, according to the adage, and that’s certainly true of the 208 XY.

Fast Facts

Model: Peugeot 208 XY THP 156

Price: £17,695

Mechanical: 1,598cc, 4 cyl, 156bhp petrol engine driving front wheels via six speed manual gearbox.

Max speed: 134 mph

0-62 mph: 7.3 secs

Combined mpg: 48.7

CO2 emissions: 135 g/km

Warranty: Three years/ 60,000 miles