If ever you needed an example of how the performance hatchback has evolved, it's tricky to think of a much better candidate than SEAT's Ibiza FR TDi. GTi-style hatches boomed in the eighties and then bust in the nineties, insurance costs instantly bursting the bubble. A resurgence of 'warm hatches' in the late nineties offered more insurance friendly alternatives and the growing relevance of emissions regulations and the ever-rising cost of fuel saw the GTi evolve again into cars like the SEAT.

In many ways we've come full circle. The GTi hatch was originally designed as the sort of go-anywhere, do anything car that offered the driver some jollies without being cripplingly expensive. As they got ever bigger, more powerful and more attractive to thieves, the focus on affordability was lost. Now cars like the Ibiza TDi FR, which retails at £13,350 as a three-door, once again makes the performance hatch an attainable prospect. Group 8 insurance means that younger drivers can partake, and manageable depreciation means that a new car isn't going to result in big bills over a typical three-year ownership period.

Focusing on market and finance may seem a slightly unorthodox way of reviewing a performance hatch but the Ibiza FR TDi is a car that appeals to the head and the heart, so we'll get the sensible stuff worked out first. Running costs are kept low thanks to an engine that will return an average fuel consumption of 55.4mpg. Even around town, it'll take a leaden foot to see less than 40mpg which means that with an average 548 miles between fills, the typical owner should theoretically visit a filling station once every two or three weeks. Even then, the tank will cost around £37 to brim full, which is cheap motoring in most people's books. Business users will appreciate the very low 138g/km carbon dioxide emissions. Pair that with the low up-front price and you have a car that won't hammer you too hard when it comes to benefit-in-kind taxation yet will still be able to raise a smile when it noses out of the office car park.

The Ibiza FR TDi's powerplant is the same that has been fitted to numerous VW Group products including the Golf and the Audi A4. With 128bhp to call upon, it'll get the Ibiza to 60mph in 9.2 seconds. Being a diesel, it also possesses some serious clout in the mid-range and the TDi FR pulls like a train from 30-70mph, the 229-lb/ft torque figure being better than a BMW330i or the old Renault Clio V6. You'll need to keep the engine in the zone between 2,000 and 3,200rpm to get the best from it but the six-speed manual box isn't a hindrance in this regard. The handling has been sharpened up to cope with the additional poke, the FR featuring stiffer coil springs, a beefier front anti roll bar and revised rear axle mounts.

"The Ibiza FR TDi is a car that appeals to the head and the heart"

Formula Racing (FR) is, in effect, SEAT's sports diffusion line, sitting below the fiery Cupra models; broadly equivalent to how sporty Ford ST models are a notch down from RS versions. That said, there's nothing second rate about the Ibiza FR TDi. It's a long way from the usual warm hatch stereotype, which consists of a car with all of the sporty accoutrements but fitted with a gutless engine that will be shredded away from the lights by a skip lorry. The traditional reason for offering these warm hatch models has been because the sportier versions are often off limits to younger drivers because of their punitive insurance ratings but manufacturers have twigged that in offering the same safety, security and repairability as the top models, insurance ratings can be kept manageable with a worthwhile engine on board.

Twin headlamps are fitted as standard to all Ibizas, giving the FR an intense stare. Walk round the back and you'll spot extended exhaust pipes which are clearly visible below the rear valance. The bumper is reshaped to incorporate a mock diffuser, another nod to SEAT's motorsport activities. As with all modern SEATs, the Ibiza displays its name centrally on its tailgate, below the large SEAT badge which doubles as the boot release. The FR also features 17" alloys, a blacked-out area behind the front registration plate and a honeycomb grille behind the front air-intakes. The interior benefits from a new three-spoke steering wheel as well as a redesigned gear knob and the seats get FR logos in case you forget which model you're ensconced within.

The Ibiza has long proved that that looking good needn't cost the earth. Briton Steve Lewis was responsible for most of the car's lines, but the final refinements were undertaken by Walter de'Silva, the man responsible for the Alfa 156 amongst others. Suddenly the reason why the rear doors don't uglify the car significantly becomes apparent. Much of the interior design was undertaken by Simona Falcinela another who jumped ship from Alfa to work for SEAT.

The car's details are more knowing and better integrated and he's succeeded in making the car appear far smaller than it actually is, a visual trick that will appeal to many buyers. Inside, you'll spot a number of VW Group parts, reappearing like old faces at a school reunion. The window switches, the gear knob, the ventilation controls and so on are all sourced from that bottomless well that's disparagingly termed the VW parts bin, and are none the worse for it.

Manufacturing a decent GTi-style hatch is all about the management of compromise. Some car makers pull this off better than others and SEAT seem to be better than most. The Ibiza FR TDi is a quick hatch that's not so powerful that insurance and pricing becomes punitive. It nails all of these demands extremely well and the provision of standard equipment is also well judged. It's difficult to imagine a better warm hatch. When the asking price is taken into account, the issue is done and dusted.