It’s unlikely the Japanese mid-size carmakers, or all that many of the prestige European brands, will be especially overjoyed about the new Peugeot 508. That’s mainly because the Peugeot 508 is such a good all-rounder, and on sale at such sharp pricing.

Take the new Peugeot 508 for a test drive and you’ll come away mightily impressed with the prestige feel, the awesome build quality, and its ability to gobble up the many and varied imperfections available in abundance on our relatively crook Australian roads. It copes with all that, and still delivers a sporty, dynamic drive.

The 508 is targeted squarely at the likes of the Volkswagen Passat, the Citroen C5 and the Skoda Superb – but it would also easily eclipse a ‘works burger’ Mazda6 or Honda Accord Euro on basically any relevant criteria (except price, on which it would be basically line ball).

You could throw the new Peugeot 508 up against at least some variants of C-Class, Audi A4 or BMW 3 Series – especially in the cheaper seats – and it’ll impress with the standard spec while at the same time not being a dynamic disappointment. In fact, this new Peugeot is evidence that the Germans are under increasing pressure to differentiate their more mainstream offerings in terms of quality and spec – although they have done rather a good job with the perception of their brands.

A colleague of mine on radio is one of Australia’s top doctors. He bought a Citroen basically because he didn’t want to be like all the other Macquarie Street specialists in Mercedes-Benzes. You could see the new Peugeot 508 appealing to the same kind of buyer.

Peugeot has thrown in a few tidy tweaks with the new 508 – tweaks like capped-price servicing, which boils down to real peace of mind for owners. Under the capped-price plan, you’ll pay just $330 per service for the first three years or 60,000km. (Services are at 12 months/20,000km, 24 months/40,000km and 36 months/60,000km. There are also intermediate checkups – at six, 18 and 30 months or 10,000km, 30,000km and 50,000km, respectively. The intermediate checks are free.)

The new Peugeot 508 is available in three ‘flavours’ – Active, Allure and GT, listed here from entry level to most sporty. There are two body styles – sedan and wagon (in Peugeot-speak, ‘Touring’ means ‘wagon’). Ultimately, there are four engines. (Although the car is released in Australia initially with only two of these available, the 2.0- and 2.2-litre turbodiesel, the other two are on their way).

The Peugeot 508 model range works like this: Active is available as a sedan only, with a 1.6-litre turbo petrol engine for $36,990. We haven’t had a chance to sample that spec or drivetrain yet, as none were available at the launch of the new car.

The Peugeot 508 Allure will be available with either the 1.6-litre turbo petrol ($39,490) or the 2.0-litre turbo diesel engine ($42,990), in either sedan or Touring body styles (add $3000 for the wagon). Initially only the 2.0-litre turbo diesel is available.

The Peugeot 508 GT is a sedan only, available with a 2.2-litre turbo diesel engine for $52,990.

(Prices quoted above are list price, and are subject to additional on-road charges.)

The entry 1.6-litre petrol four makes 115kW and 240Nm, and features direct injection, variable valve timing on the camshaft, a twin-scroll turbo and already meets stringent Euro 5 emissions regulations that won’t be mandatory here in Australia for several years.

All the engines in the new Peugeot 508 range meet the new Euro 5 emissions regulations.

The 2.0-litre turbo diesel makes 120kW and 340Nm, so (although the 1.6 petrol was not yet available for review at the time of writing) it’s a safe bet this diesel engine blows the 1.6 away from a drivability perspective. Another 100Nm – at lower revs – will do that every time. The 2.0-litre turbo diesel packs all the latest hi-tech kit and also has a catalysing particle filter. On the road in Allure models, it’s a strong performer that gets on with the job with minimal fuss, mated to a six-speed auto.

Step up to the 2.2-litre turbo diesel in the GT and the performance is certainly stronger – as dictated by the greater outputs of 150kW and 450Nm – also backed by a six-speed auto. This engine packs the same power into four cylinders (and half a litre less outright displacement) as the superseded 2.7-litre turbo diesel V6 offered – only the new engine manages it at lower revs, and offers more torque over a far broader rev range – and fully one-third less CO2 output. A simply brilliant job has been done on efficiency here.

The last engine in the range (also yet to be launched here) is a 1.6-litre turbo diesel (82kW/285Nm) with auto ‘stop/start’ technology, which Peugeot calls ‘micro-hybrid technology’. Basically it’s a fuel-saving and emissions-limiting (same thing) technology that uses engine coasting to charge up a dirty big capacitor that supplies the electrical ‘oomph’ (not a technical term…) to achieve a quick, seamless automatic restart in traffic. The 600-farad capacitor supplies 4kW of engine-restarting power (about 3hp). It’s the third generation of Peugeot automatic engine start/stop technology. We’ll let you know how well it works once it’s available for test. Peugeot says it cuts consumption/emissions by about 15 per cent.

It’s a fairly safe bet that, with its meagre outputs the ‘micro-hybrid’ option will appeal only to those for whom environmental concerns win out against all other motoring considerations. This stop/start system might be a game-changer, but every stop/start vehicle this reviewer has ever driven has been complete disappointment, a refinement destroyer, and a disruptive pain in the RS – all for the sake of saving enough to buy a café latte a week. Let’s hope this one is different.

Getting your head around the detailed specifications in model ranges can be difficult, but basically the three-step Peugeot 508 range works like this:

Active models feature 17-inch alloys with a full-sized spare tyre (the latter of which is a real plus in Australia and comparatively rarely seen on European cars). You also get dual-zone climate control, a little bit of leather splashed around on the seats, fog lamps front and rear, auto wipers and headlights, rear parking sensors, Bluetooth for phone and music (and USB for music) plus the capped-price service deal. So Active is hardly a base model, in the sense of being stripped of creature comfort or features.

Five-star crashworthiness is also standard across the range.

Stepping up to Allure retains the full-sized spare and adds full leather seat trim, four-zone climate air-con, front and rear parking sensors plus an ‘available space’ measurement function that will tell you if the parking space you just spotted is big enough, and a proximity key with stop/start button and key-in-pocket entry (a Peugeot first).

The GT adds the big output diesel, steps up to 18-inch wheels, puts a head-up display (speed, cruise, step-by-step nav) into the mix, replaces the headlamps with directional bi-xenon units, and adds tyre pressure monitoring and a security alarm. You also get far more direct steering thanks to a double wishbone front suspension arrangement (‘lesser’ models feature MacPherson struts).

The interior of the new Peugeot 508 is very pleasant. The soft-touch surfaces on the dash are beautifully crafted. The cabin ambience is understated and elegant. It’s also very quiet, and you can tell the body is very rigid because it is so quiet and shake-free inside – even on rough roads. The new 508 really excels in this area. The layout and control architecture is minimalist, and the ergonomics are fairly instinctive. Unlike, for example, your first outing in a BMW 5 Series.

If you need to transport adult passengers you’ll fit the driver and three large passengers in the new 508 with ease. Interior packaging is really well done, with fairly generous rear-seat legroom on offer.

The massive glass roof (1.62 square metres for Peugeot trivia nutcases) on Touring models is standard, and a real winner – complete with five-position motorised blind. It’s not a sunroof, however, and offers only one option: closed. This probably helps the body integrity tremendously.

Ride quality and roadholding on Allure models is excellent. The GT takes one step forwards on dynamic engagement, but two steps back on ride quality, however. If you only ever drive on billiards-table-smooth roads, you’ll love the GT’s dynamic prowess; in the real world, you might start hating its ride after the honeymoon ends, but well before the lease expires. Additionally, the GT features a space-saver spare tyre, which you will hate … even if you only ever get one flat tyre.

The GT offers a head-up display, as mentioned. This is an excellent idea, allowing the projection of the most needed instrument information (speed and nav, for example) into the driver’s primary vision area. It minimises the time your eyes spend, of necessity, off the road, which is a great idea, and a real plus for safety. In the GT, however, the projection is onto a vertical smoky glass screen above the dash, directly in front of the driver. Audi, BMW and Benz manage to project the same information directly onto the windscreen in what, it must be said, is a significantly more polished execution. You can’t help but think the 508’s head-up display is a bit of a ‘bolt-on’ by comparison.

The 508 Allure could do with more steering feel and feedback, but there’s nothing wrong with its roadholding or performance. The steering’s not terrible, but it’s the first thing you’d change about the car dynamically – if you could. Overall, the Allure is composed and capable – wet, dry, smooth or rough. And the Touring manages to add the practicality of the wagon without compromising on elegance or getting noisier inside (a difficult double act for which Peugeot’s engineers and stylists deserve due credit).

The ‘sweet spot’ in the new Peugeot 508 range is the Allure Touring 2.0 turbo diesel. It’s ideally set up for Australian driving, offering more ride compliance than the GT, and although it trades off some dynamic precision in the process it’s still a damn nice drive – even if you enjoy pressing on. You’ll love the six-speed auto in ‘D’ or manually shifted using either the paddles or the shifter – the latter uses the ‘forward to downshift’ orientation that most real drivers prefer.

At $45,990 plus on-road costs that package represents a hell of a lot of car for the money – and it’s hard to justify the extra $7k spend to jump back in the sedan-only GT. The Allure turbo diesel sedan is also an excellent  proposition – and at a cool $10k cheaper than the GT, it’s almost impossible to justify splashing the extra cash on the range-topping variant. With the Allure you get 95 per cent of the GT, at 80 per cent of the price.

The new Peugeot 508 is a proper prestige luxury car – at a Japanese price-point. Its quality and construction seems excellent. This car is a real step forward for Peugeot – and it’s not as ‘in your face’ as some previous styling exercises have been. It’s elegant and understated throughout, as well as capable and refined. The competition both in Asia and Europe will doubtless hate it.