Acknowledging the public's recent disgust over rising fuel prices and urban congestion, Nissan has decided to introduce a new entry-level model this year. Called the Versa, this subcompact boasts fuel economy above 30 mpg, ample interior space, plenty of features and a price tag lower than Nissan's more traditional entry-level car, the Sentra.

Subcompacts are popular in most other parts of the world, and in fact the Versa has already been on sale in other countries previous to 2007. (Outside of the U.S., it's called the Tiida.) North American consumers, however, seem to have cyclical interest in this type of car. To temper this, the 2007 Nissan Versa follows a next-generation approach to subcompact design.

Number one for a next-gen approach is the car's small-and-tall body style. Though this makes the Versa look a bit goofy, there's no denying that it provides an impressive amount of interior space within a tidy footprint. The Versa is only a little shorter than the new '07 Sentra, yet it actually provides 3.5 inches more rear legroom. Only in terms of shoulder room does Nissan's subcompact suffer compared to its bigger sibling. For the debut, Nissan is releasing the hatchback body style first and will follow it up later in the year with a sedan.

Unlike the Soviet-style subcompacts of yore, the Nissan Versa comes well-equipped with the latest technology and comfort features. Under the hood is a 122-horsepower, 1.8-liter four-cylinder engine and an optional continuously variable transmission (CVT). This engine is one of the most powerful in this segment and the CVT promises to combine the ease of a traditional automatic with manual-like fuel economy. For features, one can get the Versa with upscale items such as Bluetooth connectivity, side and head curtain airbags, and Nissan's Intelligent Key keyless entry system.

Of the current batch of subcompacts, the 2007 Nissan Versa ranks pretty highly. Its interior is roomy and of impressive quality, and the car serves very well as a daily commuter car. The two main downsides are that it's not particularly fun to drive energetically and it's priced at the high end of the subcompact segment. These elements keep the Versa from being our top pick (that title goes to Honda's Fit), but it's still an intriguing answer to urban congestion and high fuel prices. The Versa, particularly in 1.8 SL trim, is certainly one you'll want to take a look at.

The 2007 Nissan Versa is a small four-door available as a hatchback or sedan. Two trim levels are offered: Versa 1.8 S and Versa 1.8 SL. The 1.8 S is pretty basic. It has air-conditioning, a rear wiper, a 60/40-split folding rear seat (hatchback only) and a CD player as standard, but power windows, power mirrors and keyless entry are optional. Going with the more desirable 1.8 SL provides those features as standard as well as cruise control, upgraded interior cloth, more adjustments for the driver seat and a six-CD audio system with an MP3 player jack. It also has improved interior storage, lighting and trim. Optional features for the Versa 1.8 SL include a Sport Package (featuring exterior aero trim pieces), a Convenience Package (Bluetooth connectivity, Intelligent Key keyless entry and a leather-wrapped steering wheel with audio controls), a sunroof, upgraded audio speakers and satellite radio.

The front-wheel-drive Versa comes with a 1.8-liter four-cylinder engine good for 122 hp and 127 pound-feet of torque. A six-speed manual transmission is standard. A four-speed automatic transmission is optional on the 1.8 S, and a CVT is optional for the 1.8 SL trim. The best fuel economy comes from the CVT-equipped Versa; the EPA rates it at 30 mpg city/36 mpg highway.

The Nissan Versa comes standard with front seat-mounted side airbags, full-length side curtain airbags and a tire-pressure monitor. Antilock brakes with brake assist are optional. In NHTSA crash tests, it earned a four-star rating (out of a possible five) for driver and front passenger protection in head-on collisions. Five stars were given for side-impact safety. In its frontal offset and side-impact tests, the IIHS gave the Versa a top score of "Good."

The 2007 Nissan Versa is fairly quick off the line, but once the engine reaches 4000 rpm, it begins to grumble loudly about the increased revs. Of the three transmission choices, the six-speed manual is the most satisfying, as it maximizes the available power. The CVT-equipped Versa doesn't feel quite as peppy, but most buyers should be satisfied with its performance. Over smooth pavement, the ride quality is good, but the Versa's suspension compliance over rough road surfaces doesn't impress us, as its wheels tend to hop over obstructions rather than absorb them. The car feels tall in the corners, which is accentuated by plenty of body roll. The electric power steering is also a little slow, and braking distances are longer than they should be even for this class.

The Versa's interior is spacious and well-tailored. With its tall roof, headroom isn't an issue except for NBA players, and the combined front and rear legroom lets 6-foot-plus passengers sit comfortably at all four positions. A fifth person can be wedged into the rear center seat, but only if he's especially friendly with the outboard companions. Interior controls are easy to use, but front seat comfort is only average. The hatchback's split rear seat lowers but doesn't fold flat; doing so reveals an impressive 50.4 cubic feet for your stuff. The sedan has a 13.8-cubic-foot trunk, which is respectable for a car in this segment.