CAR ownership is full of ups and downs. And never more so than in the case of Citroen's new state-of-the-art diesel, the Xsara Hdi.

Acknowledged leaders in the field of diesel research, Citroen has used its expertise to produce a replacement for the phenomenally popular 1.9TD models that offer an impressive range of improvements.

So fuel economy is up; noise, particularly cabin din, is substantially down; refinement is therefore up; emissions are well down and performance is most definitely up.

The Xsara Hdi hides its performance advantage behind a smart but sombre hatchback exterior. Don't be fooled. With a maximum torque figure of 155 ft-lb at a lowly 1,900rpm the "butter wouldn't melt" Xsara has the same amount of thrust as an Audi A3 1.8T Sport.

And with 90 per cent of torque available from 1,900rpm all the way to 4,200rpm, the Xsara is not only quick but flexible, too.

Citroen claims it is possible to accelerate seamlessly from 25mph to over 100mph in fourth gear and, having experienced the surge of torque which arrives at such low revs, I'm inclined to agree.

This is one of the few diesels that requires a keen eye on the speedo to make certain you're not breaking the limit, so keen and smooth is the engine.

All this performance doesn't come at the expense of fuel, either. A Xsara hatch beats its petrol-powered equivalent by an incredible 40 per cent, returning an exemplary 50mpg in day-to-day use.

With that kind of parsimony even a skinflint like me doesn't mind making use of the welcome air conditioning that's fitted as standard to all Exclusive models.

There's a good amount of room inside; enough for a family of five with three kids in the back. I'm not so sure three adults would be as comfortable but there's plenty of space for two.

The dashboard is a far cry from the days when every new Citroen resembled a haphazard star ship. A large speedo and rev counter are flanked by fuel and temperature gauges. The steering wheel also has controls for the stereo (including a multi-disc CD in the Exclusive) and a handy "mute" button for those moments when you need peace and quiet.

Only the electric window switches, split between the fascia and the handbrake cowl, gave cause for some head-scratching.

Achieving the perfect driving position is easy. The steering wheel adjusts for height and reach. Useful but I would have liked a slightly meatier feel to the wheel rim.

Being a thoroughly modern design, the Xsara has hidden strengths. You can't see the patented door impact bars but it's nice to know they are there. Likewise the anti-lock brakes, the lateral and forward-facing air bags and Citroen's rear-wheel steering system which gives excellent comfort and good road-holding (although wider tyres would give more grip).

And there's more to come. Car manufacturers spent the best part of last century perfecting the petrol engine. Research into finding better ways of building diesels has only really gathered pace in the past ten years.

In a decade the diesel has reached a stage where it is now very nearly the equal of its petrol-powered cousin in terms of refinement and flexibility. New developments like particulate traps (which should slash exhaust soot emissions) will soon see it stretch its advantages still further.

It is a foolish driver indeed who rules out the new breed of DERV drinkers. After driving the Xsara HDI, there's no doubt in my mind that diesels deserve a fresh look