The three-door Alfa hatchback will share its underpinnings with Fiat’s Grande Punto. And engineers are currently testing a prototype fitted with a 197bhp petrol engine and limited-slip differential, which could form the basis of a hot GTA variant. The newcomer, known internally as the Racer, looks set to revive the brand’s Junior tag from the Sixties and Seventies. However, Alfa bosses re­main undecided on whether to replace the existing numeric naming system across the rest of the line-up.

Power for the all-new model is expected to come from a turbocharged 1.4-litre engine. There will be a choice of three outputs: 118bhp, 148bhp or 197bhp. In addition, the firm is developing a fresh 1.6-litre Multijet diesel, with power options ranging from 100bhp to 150bhp.

Entry-level versions are expected to start from around £13,000 when the model hits UK showrooms. And Alfa will monitor sales to see if it’s worth introducing spin-off variants such as a sporty coupé, a cabriolet or an estate-style version.

The small hatchback is the start of a major product offensive for the Italian manufacturer, which recently axed 60 per cent of its UK franchised dealer network in a bid to boost flagging service standards.
Replacements for the 147 and 166 are both set to debut in 2009, while a soft-roader has been given the go-ahead, too. This all-new car will be based on the 147’s successor, and is tipped to appear in 2010.