The 2008 Scion xD replaces the Toyota division's cute, efficient xA. Introduced four years ago, the xA was a popular subcompact. Scion's grand plan is to offer new models frequently, so it was time for the xA to go. While the xD is all new, shoppers can think of it as the second generation of the xA. In spirit and execution, it remains essentially the same: A small, efficient, relatively inexpensive four-door hatchback aimed at young, stylish buyers.

The new xD has a boxier roofline and more bulbous hood. We think it has lost some of the distinctiveness of the xA, but the xD can be dressed up into a unique, good-looking car, and that remains part of the Scion plan. The new xD is designed for easy personalization, and Scion offers dozens of dealer-installed parts, starting with an array of custom wheels.

On paper, the Scion xD has the right stuff. It has a longer wheelbase and wider track yet virtually the same overall length as the xA; that means shorter overhangs for a sportier appearance suggesting more agile handling. With a 1.8-liter engine making 128 horsepower and 125 pound-feet of torque, the xD is substantially more powerful than the 1.5-liter xA model it replaces (by 20 hp). The new xD's engine also benefits from the latest version of Toyota's VVT-i, or variable valve timing, technology for strong power and good fuel economy.

The xD comes well equipped, with air conditioning, a high-watt Pioneer stereo and a full complement of power accessories.

The xD sets the class benchmark for safety equipment. Front, side and curtain-style airbags are standard, as is a sophisticated anti-lock brake system. The xD is available with optional electronic stability control, which isn't even offered on most cars in its class.

In some respects, however, the xD falls short of the xA it replaces. The xD is heavier than the xA, by 300 pounds, so acceleration is diminished, particularly with the automatic transmission. Also, EPA-estimated fuel economy ratings are poorer, but that's complicated by the EPA's new testing methods for 2008 models which degrade on paper fuel economy for most cars. The xD is rated at 27/33 mpg City/Highway with the manual transmission. And despite its slightly larger exterior dimensions, the xD provides less interior space than the old xA did, and less than key competitors such as the Honda Fit. The xD's interior loses 1.5 cubic feet of volume overall, and a significant four inches of rear legroom.

The good news is that the Scion xD is a roomy little car, with lots of headroom and comfortable space for four medium-size adults. The new rear seat is particularly handy. It reclines, slides fore and aft to maximize passenger or cargo room, or quickly folds totally flat, creating an excellent cargo space measuring a maximum 35.7 cubic feet.

The xD's overall performance is spry. Ride quality is acceptable in most circumstances, and while it isn't the sportiest performer in its class, it can be fun to drive. We recommend the five-speed manual transmission, because the weakest link in the xD package is the optional automatic. It's a conventional four-speed and, with the XD's free-revving engine, it feels like it needs more gears.