The problem with popularising a new segment or type of car is that before long, rivals will cotton on and come up with a competing product.

It is a situation Nissan is facing with the second-generation Juke and which Toyota finds itself in with the Yaris hybrid. If you wanted a hybrid supermini in the last five years, the only choice was the Yaris. But this year, as diesel is falling out of favour, Honda has revived its Jazz as a hybrid and Renault is adding an 'E-Tech' version to the Clio line-up. So will the new Yaris be able to stay ahead of the pack?

Toyota is certainly not hedging its bets, because the fourth-generation Yaris will exclusively be available as a full hybrid. That means it gets a new 1.5-litre, three-cylinder petrol engine mated to both an electric motor and a mild-hybrid-style starter motor-generator. Cooperating through a planetary gearbox, this results in 116hp, 92-98g/km of CO2 and an official fuel consumption of 76mpg. Other markets also get two pure petrol engines, but there are currently no plans to offer these in the UK.

With a P11D of £19,730 and a 20% BIK band, it certainly stacks up well on paper, but to remain relevant in the face of the new competition, it will need to have made big steps compared with the outgoing Yaris, which was into its second facelift and was very much feeling its age.

Thankfully, it has. The design is a radical departure for a start, being much more aggressive. The whole body has actually got slightly shorter, but the wheelbase has increased significantly, as has the width, for more interior space.

The whole passenger compartment has shifted further back, which trades rear legroom in favour of a less upright city car-like driving position. Compared with something like the Renault Clio, you still sit relatively high, and a bit more adjustment in the steering column would be welcome, but ultimately it is comfortable enough. The seats themselves are also more supportive than most, even if more or adjustable lumbar support wouldn't go amiss.

The rest of the interior is modern and well laid out, with a pleasing feel to all the touchpoints. It is ultimately not
class-leading due to some cheap-feeling buttons and materials here and there, particularly on the infotainment screen. That system is not the best either, being quite slow to respond and a tad rudimentary in places. It has all the features modern motorists demand, including Apple Carplay and Android Auto. It is easy enough to use, though, so it shouldn't put anyone off, especially in this class.

Where the new Yaris impresses is out on the road. Toyota's hybrid system has incurred its fair share of criticism in the past. You can spend half your life trying to understand the planetary gearset concept, but all you need to know is that it works as a continuously variable transmission and could feel quite unnatural, with an apparent mismatch between vehicle speed and engine noise. A full 23 years since the Prius used this principle, Toyota appears to have cracked it. You simply put the gear lever in Drive and enjoy the extremely smooth progress. 

On the higher-spec car we drove, there was a handy head-up display, which shows the speed, speed limit and the engine revs. The revs can jump around seemingly randomly, but trust the car and it all works very well. It also never seems to lug the engine like many modern automatics have a habit of doing. Mash the throttle pedal and the Yaris moves swiftly enough, accompanied by a not-unpleasant growl from the engine.

The chassis is worthy of note as well. All the test cars had 17in wheels and sports suspension, making the ride slightly lumpy, but nothing out of the ordinary. Toyota reckons most buyers will opt for lower equipment grades with 16in wheels and standard suspension. That seems sensible and would be our recommendation too, even if the sportier set-up is perfectly tolerable and surprisingly engaging on a twisty road.