Small cars are big business for Volkswagen so its first foray into the compact sports utility vehicle segment is no niche affair.

Aimed squarely at urban drivers, the T-Cross is the third new SUV to appear from Volkswagen in the last 18 months.

Priced from £16,995 to £25,055 it sits below the T-Roc, already the best-selling SUV in its class in Europe, and comes in front-wheel-drive only with a choice of two 1.0-litre, three-cylinder petrol engines and four trim levels.

No predictions on UK sales were being made at the UK media launch this week on the boundary of Oxfordshire and Berkshire, but it is clear that Volkswagen has high hopes for its newcomer.

It might be just 55mm longer than a Polo but it’s a practical, well-equipped and distinctively-styled package with the look and feel of a much larger vehicle.

First impressions on the road are of a well-constructed, quiet car that despite its focus on neat and nippy round-town driving, is clearly at home on sweeping country roads.

The 115 horsepower version of the engine is impressively smooth and refined, particularly when mated to the seven-speed, semi-automatic DSG gearbox.

If you opt for a manual gearbox and the 95 horsepower version of the engine, then you need to be prepared to work your way through the five-speed box if you encounter hills.

That said, once you hit a cruising speed, both versions will happily sail comfortably along.

And while it might not have the lofty driving position of a Range Rover, the 10cm higher hip point over the Polo does give you a commanding view of the road.

The entry-level S trim car comes with everything from 16-inch alloy wheels and electrically- adjustable and heated door mirrors, to an eight-inch touchscreen infotainment system, rear LED tail lights and automatic headlights.

Safety equipment includes standard-fit front assist with city emergency braking system and predictive pedestrian protection, as well as lane assist with blind spot plus lane keeping system and hill start assist.

All T-Cross versions also have a sliding rear bench seat as standard, providing the choice between enhanced rear legroom or a bigger load area.

Move up to the SE model, which is expected to account for half of all sales, and in come 17-inch alloy wheels, black roof rails and front fog lights with cornering function; a leather-trimmed, multifunction steering wheel; and a variable boot floor. Adaptive cruise control, app connect and a driver alert system are also fitted.

Options available include five different alloy wheel designs; keyless entry; high-specification beats sound system; and a selection of ‘style packs’ which allow buyers to customise the look of both interior and exterior.

The SUV sector might look ridiculously crowded already, but Volkswagen is convinced we have not seen anything yet, with the annual global sales of the small SUV sector alone expected to grow worldwide over the next ten years from about 6.4 million cars today to around 10.6 million.

While one in five Volkswagens sold now is an SUV, the company expects that figure to rise to half of all VWs sold within a few years, with VW’s first fully-electric SUV, the zero-emission ID. Crozz, due to be launched next year.

Auto facts

Model: Volkswagen T-Cross SE 1.0 TSI 115PS DSG

Price: £22,440 as tested

Insurance group: 10E (1-50)

Fuel consumption (combined): 45.7mpg

Top speed: 120mph

Length: 423.5cm/166.3in

Width: 179.9cm/70.6in

Luggage capacity: 13.6 cu ft

Fuel tank capacity: 8.8 gallons/40 litres

CO2 emissions: 111 g/km

Warranty: Three years/ 60,000 miles