Hatchbacks come in lots of different shapes, sizes and price brackets. Take the BMW 1 Series for example. Spec it right and you can pay as much as you would for a luxury saloon.

Going up against the likes of the Mercedes A-Class and Audi A3, the 1 Series aims to offer everything that makes BMW such a coveted brand, but in a smaller package – which for BMW is mainly interior luxury, class-leading driving dynamics and rear-wheel drive.

Our test car, the 1 Series 120d xDrive M Sport, was definitely at the pricier end of the spectrum. So, as well as aiming to offer luxury and fun-factor, the M Sport flair adds performance-orientated enhancements such as bigger brakes and a sporty body kit, and the xDrive adds four-wheel drive composure.

But regardless of its leather seats, 0-62 sprint time and BMW badge on its nose, is it really worthy a chunk out of the bank account? I mean, it’s just a hatchback at the end of the day, right?

Performance

The engine options in the 1 Series can be a bit overwhelming, especially if you are new to the BMW brand and can’t quite work out what size engine 118i or 120d is referring to.

The 120d model we had on test was a 2.0-litre diesel unit producing 187bhp and 400Nm of torque. With that amount of power on tap our 1 Series got from zero to 62mph in just 6.8 seconds, which is fast – really fast, especially for a diesel, and would match many hot hatches for pace.

The power delivery of this diesel is on the money too. Not only does peak torque come in at just 1,750rpm, but there is minimal turbo lag and the accelerator is incredibly responsive when feathered. Combine this responsiveness with a slick eight-speed automatic gearbox and you have a fun little sports car.

This eight-speed auto, which with our M Sport trim came accompanied with paddle shifters behind the steering wheel, was fast to react and, unlike in some sporty cars with paddles, actually enhanced the enjoyment and sharpness of its gear changes.

Ride and Handling

The body composure of the 1 Series is spot on too. Fling it into a bend and the car stays planted, digging into the tarmac and allowing you to catapult it out of an apex.

A lot of cars claim to have a ‘balanced’ ride, being both comfortable and yet enjoyable to drive. The rear-wheel drive 120d M Sport xDrive hits the proverbial nail on the head. First off, dynamically, this car is excellent. The steering has pinpoint precision and you will always know exactly where the wheels are pointing at all times. The steering’s also perfectly weighted to accommodate all driving scenarios. Need more/less weight to the steering? Then select one of the driving modes. However, we think BMW’s Normal mode is the best of the bunch. The body composure of the 1 Series is spot on too. Fling it into a bend and the car stays planted, digging into the tarmac and allowing you to catapult it out of an apex. Our adaptive M Sport suspension works its magic here, ensuring damper settings are tuned appropriately when the car’s weight is being hurled into each corner of the car. The xDrive four-wheel drive system enhances its cornering ability further with added grip. As for the M Sport brakes, they grip like a vice. Moving away from the performance aspect, the 1 Series is brilliant for driving around town as well. The adaptive suspension acts accordingly, delivering a smooth, comfortable ride that can deal with lumps and bumps. And when cruising on the motorway it feels like one of its bigger BMW brothers, eating up the miles for fun.

Interior and Equipment

With 400Nm of torque, the 120d has 20Nm more than the Volkswagen Golf GTD.

Thankfully, the 1 Series does feel like a BMW inside. There’s the familiar dash-mounted screen, strip of media buttons and, of course, the excellent iDrive media system accompanied by an easy-to-use toggle on the centre console. Touch pretty much anywhere in the cabin and you will feel soft, up-market materials. The seating position is comfy too, perfect for long motorway trips. Standard kit is already pretty luxurious in the 1 Series – sat-nav, DAB radio, Bluetooth - so our M Sport trim simply builds on these features with sporty seats, leather upholstery and some M Sport body work. Although luxury is at the forefront of this cabin, practicality is still impressive, with deceivingly useful door bins that can fit a bottle in, two cup holders in the centre console and a good-sized glovebox. Sit in the rear and there’s loads of headroom and a fold down arm rest with two cup holders. The only slight downside is the slight lack of leg room and the present, but pretty useless, door bins. Our model was a five-door though, eliminating the awkward climb into the rear - always handy. What it fails to offer in the rear it makes up for with its boot. Not only does the 1 Series’ boot have 360 litres with the seats up and 1,200 litres with the seats down, but these rear seats fold completely flat, giving a flexible loading surface. And, due to its 40/20/40 folding seats, you can just fold the middle seat down for added usability.

Cost

The 116d diesel is slightly more efficient – but only slightly. For the extra grunt you get from the 2.0-litre 120d, it is definitely worth it.

Emitting just 114g/km of CO2, the 120d is surprisingly efficient. It’s even more baffling that it claims an average return of 66mpg, which isn’t totally unrealistic if you do a lot of motorway miles. The 116d diesel is slightly more efficient – but only slightly. For the extra grunt you get from the 2.0-litre 120d, it is definitely worth it. Do those impressive figures, along with its brilliant drive and luxury come at a price? Of course they do. Go for the 120d M Sport xDrive and you are looking at around £29,000.

Our Verdict

If you are looking for a premium hatchback then expect to pay a premium price - £29,000 ticks that box. But will that be money well spent? Yes. Although £29,000 could get you a well-specced BMW 3 Series, there is just something about the mean machine, caged animal character of the 1 Series. There’s also the fact that it actually manages to successfully emulate everything that makes BMWs so good. It can be difficult to recommend a small car with such a big price, but if you do splash out for it then you will definitely feel like you are getting your money’s worth.