Glued to the back of a Peugeot, three letters stand for driving fun: GTi. Unfortunately, the past few decades haven't been kind to the legacy, which has been tarnished by some underwhelming attempts at shaping a modern hot hatch. Thankfully, it seems the engineers at Peugeot Sport have found their mojo. The 308 GTi is evidence of this, neatly mixing outright performance with usability in the special way reserved for the best hot hatches.

It's a difficult time to be getting back into the hot hatch game, because there's something for everyone out there. It's hard to walk past the ubiquitous Golf GTi, but if trackdays are important the Renault Megane RS275 Trophy is scalpel sharp. There's also the small matter of the lively Ford Focus ST, or the bewinged Honda Civic Type-R. If they don't offer enough performance you could always stretch to an Audi RS3, or the Mercedes A45 AMG, or even the rear-drive BMW M140i.

Peugeot is up against stiff competition from all angles with the 308 GTi, and mediocrity won't cut it.

Based purely on engine size, Peugeot is waltzing into World War 3 brandishing a butter knife. Current wisdom would suggest you need at least 2.0-liters to sit at the adults' table, but the 308's turbo four displaces just 1.6. What's more, there's no dual-clutch gearbox option – it's three pedals or bust.

These decisions make more sense when you read down the spec sheet. The 1.6-liter THP S&S engine is proof of what can be achieved when downsizing is done right, punching out 186 kW (250 hp) of power in base tune, and 200 kW (270 hp) in top specification. Both versions make the same healthy 330 Nm (243 lb-ft) of torque between 2,000 and 5,000 rpm.

Not only is the Pug powerful, it's light too. A Golf GTI weighs just over 1,400 kg (3,087 lb), and the Ford Focus ST is pushing 1,500kg (3,307 lb). Even though it's every bit as big and usable as its rivals, the 308 tips the scales at just 1,280 kg (2,822 lb). We're a little sceptical of that figure in the more expensive GTi 270 – which runs with bigger wheels, brakes and a Torsen diff up front – but it makes for a quick hatchback regardless.

When we say quick, we really mean it. In the cheaper GTi 250, the sprint to 100 km/h (62 mph) flies by in 6.2 seconds, and the 270 hits triple figures in just 6.0 seconds. Both times are comfortably faster than the Focus ST's 6.4 second sprint, and make the 6.5-second Golf GTI look pedestrian.

From the second you sit down behind the wheel, the car has a nice sense of purpose about it. The in-house bucket seats grip you reassuringly, and the compact leather wheel extends all the way out into your chest.

Prod the start button and the engine comes quietly to life, settling to an almost silent idle. Combined with the well laid-out metal pedals and notchy gearshift, the 308 GTi's first impression is a good one.

Pulling away reveals it's a powertrain, totally at odds with what you might expect of something so heavily boosted. Throttle response is respectable for a small engine/big turbo combination, and there's a beautiful slug of torque on offer between 1,800 and 3,000 rpm. Around town you can just surf it, relying on it to pull from low speed in third, fourth or even fifth gear.

That's not to say it doesn't want to pull through the rev range, because boy does it pull. Flatten the throttle and the thrust just keeps building, rev needle flicking around the dial and slamming hard into the rev limiter. Far from being a one trick pony, the unit in the GTi manages to combine low-down pulling power with a zinging top-end.

It doesn't feel quite as strong as the engine in the Renault Megane 275, but the engine's willingness to chase the redline makes it feel alive and willing. It's not as fast, but it's equally as fun in a straight line, regardless of whether you're in the 250 or 270 hp version.

If the Peugeot feels every bit as fast as the class-leading Frenchman in a straight line, it lags slightly behind in the corners. There's an abundance of grip from the Michelins – especially in the dry – but you never get much feedback through the steering wheel, which feels fairly inert in regular or dynamic mode.

Pushing right up to the limits of grip, it can be hard to determine when the nose will stick. Sure, it feels weighty enough, but very little in the way of information actually makes it through to your fingertips.

On the way out of a corner is where the difference between the GTi 250 and 270 shows. Although you pay more for the privilege, the 270 is fitted with bigger Alcon brakes at the front, bigger 19-in wheels, deeper bucket seats and (crucially) a Torsen differential.

In the 250, a deft touch is needed to avoid spinning up the front wheels on the way out of a corner. Get too greedy and the traction control cuts in, dashboard light blinking madly as precious time is wasted turning rubber into smoke.

When the road is dry, the differential in the 270 means you can get on the power earlier, to the point where you feel it digging in, finding grip where otherwise there was none. On the racetrack, it's an invaluable advantage, and one well worth considering if outright performance is paramount.

But, does that make the 270 a more attractive proposition than its less expensive brother? Actually, we don't think so. From the outside, it takes a trainspotter to tell the difference between the two. Both cars look mean, sitting 11 mm lower than garden-variety 308 hatches, and the only difference inside is down to the seats.

Although it's not the most spacious rear seat, the 435-liter (15.36 cu.ft) boot has plenty of space for anything short of a round-the-world trip's worth of luggage, and tall drivers will be pleased to know the front seats can be dropped right down to the floor.

In everyday driving, the benefits of having a locking differential and big brakes rarely make themselves known, and the smaller wheels on the 250 mean its ride isn't as harsh as the faster, less comfortable 270's. We also used slightly less fuel in the GTi 250, averaging 7.0 L/100km (33.6 mpg), or 0.4 L/100km (1.9 mpg) less than we did in the 270.

Pricing starts at AU$44,990 in Australia and £27,290 (US$36,000) in the UK for the GTi 250, while jumping to full-fat GTi 270 trim will set you back an extra AU$5,000 or £2,855 (US$3,800). We'd be saving the cash, and settling for the base model car because in this case, less is more.

Product page: Peugeot

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