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Even though small car sales are sagging, there’s a lot to be said for economical transportation that sips gas, is fun to drive and can be bought for thousands less than a mid-size.

The Neon is just such a car. In this case the test car happens to be a Plymouth, but the Dodge version is nearly identical. The Neon was a bold step for Chrysler when it was introduced in 1994 because it was designed, developed and built without sharing any parts or costs with an overseas partner. It proved that an all-American small car could compete against tough competition from abroad.

To bolster Neon sales that were down about 15 percent last year, Chrysler is adding equipment and holding the price. It has eliminated the base model, which makes the “Highline” now the entry-level unit. Plymouth’s “Style” package is a special collection of equipment such as a power sunroof, tachometer, power front windows, power mirrors, power locks and an AM/FM stereo cassette player for $14,000. That is the car I drove.

Factor in a 132-horsepower engine, plenty of room for four and styling that is, dare we say, cute, and you have one of the year’s better small-car bargains.

“Power” and “fun-to-drive” are notable Neon attributes. At the heart of the car sits a 2.0-liter, 16-valve overhead-cam engine that is as feisty a four-cylinder as you are likely to find. It trundles to work with the manners of a pack horse, yet when you need to blast down a freeway ramp before you are devoured by an approaching 18-wheeler it leaps to the task.

Engineers worked to reduce the noise, vibration and harshness (NVH) of this engine for 1998, and to that end they have made improvements. The engine still produces a fair amount of noise, but it feels much smoother.

The five-speed manual gearbox is the transmission of choice for those who want to drive their subcompacts like sports cars because it gives the driver easy access to the engine’s power reserve. True, the automatic would be handy in stop-and-go traffic, but it soaks up power. The five-speed also serves up the best fuel economy. Our test car was rated at 29 mpg around town.

Neons now comply with California’s Low Emission Vehicle (LEV) standards.

A double-wishbone suspension is used for flat cornering and good road holding. The body rolls very little in turns, and the level of grip is impressive, which makes it a sensible alternative for those who want a miniature performance car.

Sports-car handling has always been a Neon trademark, and they have been most successful in amateur racing circles. A Competition Group package contains quicker steering, performance-tuned suspension and various other improvements. A 150-horse, twin-cam motor is also optional.

The Neon’s cab-forward design provides for an interior that is quite roomy by small-car standards. Head and leg room in front is more than adequate, even for tall drivers. In the back, legroom is on par with many larger vehicle s. A split/folding back seat is standard so that active owners can expand the cargo hold as they need.

Chrysler added second-generation airbags that open less forcefully. From an ergonomic standpoint, I would swap the radio and heater controls to get the radio up higher and closer to the driver’s line of sight.

Overall, the Neon is a fun car that exudes energy and enthusiasm at a reasonable price. It is not for everyone, but those who like a spunky car will feel right at home.

Price

The base price of our test car was $11,355. The Style package ($2,745) consists of air conditioning, power sunroof, tachometer, power front windows, power locks, power mirrors and AM/FM cassette player. Floor mats, for $50, brought the sticker price to $14,045.

Warranty

The standard warranty is for three years or 36,000 miles.

Vehicles for The Star’s week-long test drives are supplied by the auto manufacturers.

Point: To the positive side of the ledger, the Neon brings a feisty four-cylinder engine, generous interior and a competitive price.

Counterpoint: On the negative side, debits include a fair amount of engine noise, cupholders that are too low and a ride that some may find objectionably firm.

SPECIFICATIONS:

ENGINE: 2.0-liter, 4-cyl.

TRANSMISSION: Five-speed

WHEELBASE: 104 inches

CURB WEIGHT: 2,507 lbs.

BASE PRICE: $11,355

PRICE AS DRIVEN: $14,045

MPG RATING: 29 city, 41 hwy.