Used 2004 Mazda 3 Hatchback

Give it one quick glance and you probably wouldn't guess that the Mazda 3 is the newest player in the highly competitive economy car segment. With its distinctive snout, smooth flanks and shapely rear end, it looks more like a downsized European-bred machine than a Japanese car that starts well under $20,000.

Look inside and the perception doesn't change much. A sleek yet functional design blends with high-quality materials and ample passenger room to give this new Mazda an upscale look and feel that few cars in the class can match. Drive it a few miles, or for several hours as we did, and the feeling that the 3 is not just another import econobox grows even stronger.

Could it be the new standard for economy cars in the U.S.? With competition like the Honda Civic and Toyota Corolla to contend with, we wouldn't go that far just yet, but our initial impressions indicate that anyone looking for an affordable, fun-to-drive sedan or hatchback would find more to like in the Mazda 3 than either one of those other perennial front-runners.

A direct replacement for the Protegé and Protegé5, the Mazda 3 comes in both sedan and four-door hatchback body styles. The sedan is offered in two trim levels — base "i" and upgraded "s" — while the four-door hatchback comes in "s" trim only. A Sport Appearance package that adds additional bodywork and larger wheels for an even sharper-edged look is available on all models.

Mazda backs up the 3's sporty image with a pair of engines that places it at the top of the class when it comes to horsepower. The base sedan uses a 2.0-liter four-cylinder rated to produce 148 horsepower (144 in Calif.), while the upgraded "s" models use a 2.3-liter four-cylinder that bumps the horsepower number to 160. Both engines can be equipped with either a five-speed manual or a four-speed automatic transmission.

As you might expect, the engines feel similar in their strength and power delivery. When you consider that the base 2.0-liter has more horsepower than many of its competitors' top-level engines, it's not surprising that it feels more than adequate around town and on the highway. Refined and quiet throughout its full rpm range, the 2.0-liter requires only careful attention to gear choice to maintain peak power. Drop a gear and higher-speed passing is rarely a problem, and even if you're lazy and leave it in too high a gear, it still manages to pull its way out with little fuss.

The more powerful 2.3-liter engine scratches to the redline more eagerly while retaining a smooth and quiet delivery that doesn't discourage winding out each gear. There's more pop than the base engine, but only those with a dedicated yearning for performance are likely to find it necessary to have the larger engine. The five-speed transmission is the same unit used in the midsize Mazda 6 although a few modifications give it a more substantial, refined feel. The four-speed automatic features manual-shift capability and electronic slope control for less juggling of the gears when negotiating hills.

With the Protegé's well-established track record for superior ride and handling, the 3 has big shoes to fill, but with the help of a few hand-me-down parts from Mazda's midsize sedan, it's well up to the task. Liquid-filled suspension bushings, an electrohydraulic steering system and an all-new multilink rear suspension design are just a few of the 3's upgrades that deliver refined road manners that will surprise those expecting the typically flabby ride and handling of most economy cars. Tightly controlled but rarely harsh, the 3's suspension leans toward the sporty end of the spectrum without beating up your insides along the way. Feedback through the wheel is still better than average, and the brakes are firm and powerful. The only downside is that road noise is up, too, so there's still some room for improvement.

Much the same could be said about the 3's interior, as it's better in nearly every way yet still not without its flaws. Unlike most cars in this class that offer nothing more than purely functional setups, the 3's cabin has a more cohesive layout that manages to inject a little style into the equation. From the individually recessed gauges to the symmetry of the center stack controls, the attention to detail is evident. Satellite steering wheel controls are a nice touch for a car in this price range, but we could do without the cheesy LEDs that light up in correspondence with volume or station changes. And as good as they look, the controls don't have the high-quality feel that you get with the Honda Civic.

Larger in most exterior dimensions than the outgoing Protegé, the 3 offers only negligible differences in interior space. There's still enough room for taller drivers to get comfortable up front, and the rear seats are acceptably spacious for a car in this class. A tilt-and-telescoping steering wheel is always a nice feature to find, but we can't say the same about the rotary seat recline mechanism. Trunk space is up on sedan models, but the hatchback is still short on cargo space until you fold the rear seats.

Interior nitpicks aside, the Mazda 3 addresses many of the shortcomings that kept the previous model stuck behind the competition. There's no longer a lack of power or refinement in the engine department, as both of the available four-cylinders provide ample thrust and low noise levels. The suspension setup is better than ever, and the interior still has a unique, upscale look that no other economy sedan can touch. Combine all these improvements with the stylish exterior and the new Mazda 3 looks as though it could finally shrug off its second-tier billing and start giving the Civic a run for its money.