Our 2002 Car of the Year has not lived up to its potential, but that's more because of the troubles at Fiat than the product itself. Stung by criticism of the Palio's fuel efficiency, Fiat brought out the NV last year, a much-improved and fine-tuned version of the original.

DESIGN & ENGINEERING
A SOLID, HANDSOME AND WELL-ENGINEERED HATCHBACK
The Palio's looks are unchanged since it was launched three years ago but this hatchback is still a handsome, clean design, undulled by familiarity. What still surprises and pleases, each time you enter this car, is how solid it feels, in the thunk of every door and the sheer thickness of each pillar. The Palio was designed specifically for developing markets, so it is built extremely tough, with relatively simple technology, but the depth of engineering is unmatched in this group. The fit and finish is, however, not among the best.

INTERIORS, SPACE & EQUIPMENT
WELL-DESIGNED AND COMFORTABLE
The Palio's interiors are spacious and comfortable, with passenger room comparable to a mid-size car. The seats, which are shared with the Siena, are extremely comfortable and feel like they belong in a bigger car. The ergonomics are excellent with all the controls well-placed and falling easily to hand.
The chunky steering is great to hold, the dead pedal to rest your left foot is a boon on long drives and the high-set music system which sits nicely in line with your vision, makes you wonder why other manufacturers haven't adopted the same approach. A problem area is visibility, hampered by the thick A-pillars and high waistline; plus, we wish the Palio had seat height adjustment.
Equipment levels are on par with the others, but sadly, the plastics seem rather cheap. The generous seating is complemented by ample boot space which makes the Palio a very practical family car.

ENGINE & PERFORMANCE
SMOOTH AND REFINED, BUT LACKS GRUNT
When Fiat introduced the NV version of the Palio, the engine was recalibrated, more for efficiency than performance. It's not as responsive as the earlier engine and feels sluggish at low revs, which can be annoying when you want to scoot past traffic. Look at the performance figures: it's nowhere near as quick as the competition but in reality it doesn't always feel that way. There's plenty of meat near the 6000rpm redline and the near-perfect gear ratios helps wring the maximum out of the 72bhp engine. The cable-operated gear lever is also a delight to use.

RIDE & HANDLING
BEST IN CLASS, BUT TURNING CIRCLE POOR
Drive away in the Palio and you can't help warming to the superb sense of control it offers. The steering is by far the best; responsive, well-weighted and wonderfully accurate. Fiat has also managed to find a good balance between ride and handling and the Palio feels rock-solid on virtually any surface.
At low speeds, the Palio feels a bit stiff and lacks the compliance of the Corsa. Also, the poor turning circle hampers manoeuvrability and the Palio is nowhere near as easy to park as its smaller rivals.
The brakes have been improved over the years and offer good stopping power but the pedal feel is still mushy.

FUEL EFFICIENCY
ON THE THIRSTY SIDE BUT ACCEPTABLE FOR ITS SIZE AND WEIGHT
Fiat took great efforts to improve the Palio's efficiency and the results are there to see. It gives a respectable 9.2 kpl in the city and 14.0 kpl on the highway. The Palio is nowhere near as fuel-efficient as its smaller and lighter rivals but it’s an acceptable figure given the size and weight of the car.

BUYING & OWNING
AFTER-SALES SERVICE AND RE-SALE VALUE ARE POOR
The real problem with the Palio: Fiat's sales and service is apathetic. Many people will still shy away from the car, despite the reasonable asking price — plus, large discounts are always easy to find.
The car itself is fairly reliable, Fiat is pulling up its socks and spare parts prices have been slashed recently.