It was one of the most surprising cars of 2011 – and a likely award winner if a Most Improved Car of the Year trophy were to exist – and now it has increased its appeal with new variants and a cheaper starting point.

At $15,290 before on-road costs, the three-door hatch introduces a new entry price to the Rio range, while the more upmarket SLS aims to keep changing perceptions about the Kia brand.

The Kia Rio sedan, which is largely targeted at fleet buyers, is styled more conservatively and offers better luggage space and rear-seat room.

The South Korean manufacturer has taken a generational leap forward with the fourth iteration of the Rio, as we found out when we first drove the all-new Rio five-door in September 2011. The three-door and sedan are equally impressive.

Perhaps the biggest surprise of the new Rio is the way it rides over some of Australia’s roughest roads and the confident feel it gives the driver. Kia Australia invested heavily in tuning the new Rio’s ride and handling to suit local conditions, and benchmarked it against two of the most dynamically sound cars in the segment: the Volkswagen Polo and the Ford Fiesta.

While it still lacks the all-round brilliance of the class-leading Polo and the exhilarating handling of the Fiesta, the Rio feels effortlessly composed on both good and bad surfaces. The suspension springs back quickly to iron out undulations and harsher ruts, ensuring a comfortable ride for passengers.

The handling of the three-door Rio S is a little unnerving at times, though. Powered by the smaller 1.4-litre engine and running on 15-inch steel wheels, the steering feel can be unpredictable over bumps at higher speeds and around corners.

The Si sedan and SLS hatch, both powered by the larger 1.6-litre engine and riding on 16- and 17-inch alloy wheels respectively, feel better balanced and more precise.

All variants and tyre sizes direct some road noise into the cabin, especially on rougher roads and highways.

The 1.4-litre petrol engine is relatively quiet and gets on in a gentle, progressive manner. The 79kW/135Nm four-cylinder unit doesn’t feel quick and the 0-100km/h sprint times confirm that. The smooth-shifting six-speed manual hits triple figures in 11.5 seconds, while the optional four-speed auto ($2000) drags its feet at 13.2 seconds.

The better option is the 1.6-litre petrol, which is found in all models above S specification. With 103kW and 167Nm, the four-cylinder direct-injection unit produces 30 per cent more power and 24 per cent more torque. It’s not only faster than the 1.4-litre – 10.2 seconds from 0-100km/h for the manual, 10.3 seconds for the six-speed auto – it’s also more fuel efficient. Manual variants use 5.6 litres per 100km on the combined cycle versus 5.7L/100km for the 1.4-litre, while the automatics measure 6.1L/100km to 6.3L/100km.

The bigger powerplant is the most powerful engine in the light car segment, with the exception of performance models such as the Polo GTI and the Renault Clio RS200. It’s more lively than the 1.4, but lacks the low-down torque and zippy nature of the Polo 77TSI’s turbocharged – and more fuel-efficient – 1.2-litre.

The six-speed automatic is the same versatile gearbox found in the Kia Optima and Kia Sportage. It’s smooth and well calibrated for the smaller Rio, although is forced to drop back when confronted by inclines and overtaking manoeuvres, resulting in higher revs and a louder engine note. The 1.6/manual combination is the sweetest of the bunch, and represents good value with its sub-$20,000 price tag.

Although Kia Australia is pushing head office for it, there’s no high-performance turbocharged engine on the horizon. The local brand is less enthusiastic about a diesel variant, feeling the model’s premium price, marginal fuel savings and manual-only transmission would limit its appeal.

While styling is subjective, the new Rio looks sharp and decidedly more masculine than most light cars. It’s no surprise the Rio was initially designed as a three-door, as the new hatch’s styling is well balanced and exudes a sporty, playful character. The sedan is a triumph, too, eschewing the contrived styling common among light sedans for a cohesive, clean appearance.

The interior has also taken giant steps forward. The layout is functional, the steering wheel and gearsticks have a good look and feel, and the buttons, dials and switches have a classy touch. The quality of the interior plastics and materials rivals most light cars, although the abundant scratchy surfaces lack refinement.

Drivers should find their sweet spot easy enough thanks to a tilt and reach steering wheel and seat height adjustment. Forward visibility is aided by small A-pillar cut-outs. Large C-pillars restrict rear visibility in the three-door; the view from the sedan is significantly better.

The shape of the roof means headroom is more accommodating for rear-seat passengers in the sedan. Legroom is adequate in both body styles for a vehicle in this class. The sedan also benefits from a larger boot (389 litre versus 288 litres), although compared with its rivals, the hatch’s cargo volume is particularly impressive. Both feature flat floors that sit atop full-sized spare wheels.

The entry-level Rio S hatch gets a manual air conditioner, trip computer and a four-speaker audio system with CD player and AUX/USB/iPod/Bluetooth connectivity, including phone and music streaming.

The Si sedan adds front fog lights, folding side mirrors, an upgraded instrument cluster, cruise control, leather-wrapped steering wheel and gear knob, sliding centre console armrest, soft-touch dash plastics and silver trim highlights.

The Rio SLS is arguably Australia’s best value car for under $20,000. Standard on the range-topper are automatic projector headlights, LED daytime running lights and taillights, cornering lamps, dual chrome exhausts, uprated brakes, smart key entry and push-button start, climate control, rain-sensing wipers and leather upholstery.

The Rio is rated five stars for safety, with six airbags, electronic stability control, hill-start assist and seatbelt reminders standard across all models.

Like all new Kia models, the Rio is covered by a five-year/unlimited kilometre warranty.

The Kia Rio three-door hatch and four-door sedan are handy additions to an already convincing light-car line-up. The fact we compared the Rio with the Volkswagen Polo throughout this review is massive compliment in itself, and is evidence of just how far the tiny Korean has come.

2012 Kia Rio manufacturer’s list prices (excluding government and dealer charges):

Three-door hatch:

• S six-speed manual – $15,290
• S four-speed automatic – $17,290
• SLS six-speed manual – $19,990
• SLS six-speed automatic – $21,990

Four-door sedan:

• Si six-speed manual – $19,690
• Si six-speed automatic – $21,690

Five-door hatch:

• S six-speed manual – $16,290
• S four-speed automatic – $18,290
• Si six-speed manual – $18,990
• Si six-speed automatic – $20,990
• SLi six-speed manual – $19,990
• SLi six-speed automatic – $21,990