Honda began showing off its new Insight hybrid to the paying public today – we were kindly invited to a “VIP launch event” by our local dealer, before the car goes on sale next month. This is our first chance to poke and prod the new car and we aren’t going to waste it.

We start by poking and prodding the interior, and find that most of the plastics are hard, unyielding and not very nice to touch or to look at. The doors also shut with a ringing clonk rather than a solid thud, and the seats are spoiled by a nasty ratchet adjustment mechanism. And this is the £18,390, top-spec ES-T model too, where the oblong satnav unit sits uncomfortably far to the left within its swoopy plastic bezel.

But then we temper our disappointment by reminding ourselves that the Insight is a budget hybrid – designed from the outset to undercut Toyota’s Prius and Honda’s own Civic Hybrid. Viewed this way, the lack of prestige touches is entirely forgivable. Honda says the £16,790, mid-spec ES model will be the volume seller, but we’re not so sure. We suspect the cheaper SE, at £15,490, offers a better balance between outlay and ambience.

Toyota’s more expensive Prius has become a popular choice among Central London minicab drivers, but there seems little chance of the Insight following suit. The rear seats in Honda’s new hybrid have a headroom problem. As the aerodynamically honed roof swoops down from its high point over the driver, the metalwork slices through the space where a tall rear-seat passenger would expect to put their head. Only if you’re under five foot ten can you hope to sit in the back comfortably. Fortunately there is plenty of rear legroom within which six-footers will have to slump.

Front seat travel is better. The interior is airy and light – lifted by the hard, pale plastics used on the lower dashboard, door trims and centre console. The seats are firm and comfortable, the small centre armrest is welcome, and the pillars either side of the steeply raked screen are usefully narrow by modern standards.

The steering wheel is adjustable for reach and rake and is identical to the one in a Civic Hybrid, with audio controls in the spokes as standard. It’s a lot nicer to hold with the leather covering you get with ES trim level. The power-folding door mirrors are dinner-plate large, making up for the distorted, bisected view through the rear hatch.

We were, unsurprisingly, reminded of the Civic Hybrid when we drove the Insight. It uses the same basic hybrid setup, albeit with a smaller engine, weaker motor and fewer batteries. The gearbox is similar too – a continuously variable unit controlled via a conventional auto selector ahead of the handbrake. The ES and ES-T models have paddles attached to the back of the steering wheel, which will force the gearbox to change up or down in seven steps. We played with the paddles for a bit but honestly couldn’t see the point. You can raise the revs manually before an overtaking manoeuvre but it makes no appreciable difference to the Insight’s ability to gather pace. Left to its own devices the CVT is very quick to respond to the driver’s right foot, rearranging its ratios so that the engine can run at its peak power output.

Some drivers will find it disconcerting to hear the engine racing at a constant level while the car accelerates hard. It sounds and can feel like a slipping clutch, but you soon get used to it.

But accelerating hard is, of course, the last thing you should do in an eco car, and the Insight will admonish you for doing so. The high-set digital speedometer is backlit in green if you’re driving well, from a fuel-consumption point of view, but fades to turquoise and finally to blue if you’re being a more profligate and heavy footed pilot.

The colour change is a welcome and useful way to remind you that different driving styles have a significant impact on miles per gallon. It’s a much more practical reminder than the Tamagotchi-inspired green-driving mode you can choose in the digital trip computer, set inside the large central tachometer. Here, tiny plant shapes will grow if your consumption stays low for long enough, and they will then wilt and die if you start driving like a loon. We suspect few owners will bother with this virtual garden after the first five minutes.

Also more practical is an eco driving mode, selected via a green button on the dashboard, which softens the throttle response, and modifies gearbox and aircon settings among other things, to help conserve fuel. The Insight doesn’t feel particularly fast with our without this button depressed, so given that it promises to save fuel we switch it on for most of our test drive.

We drive a 25-mile loop of urban streets, A-roads, and a short stretch of motorway, with the aircon keeping us cool on a warm spring day, and make no special effort to drive economically other than obeying speed limits. The Insight ES-T informs us that we’ve achieved 58 miles per gallon.

We can’t verify this figure, but the Insight certainly feels like a frugal car. The engine spends most of its time at the bottom of its rev range, even on the motorway, and the tacho needle drops to zero as the engine cuts out when you brake below about 8mph. It will stay inert when stationary until you release the brake. This Idle Stop system will of course automatically restart the engine if the batteries are running low when running the climate control, for example.

The car also charges the batteries when the car is slowing, but has disc-brakes all round for those emergency situations. Surprisingly, the tyres are not low-rolling-resistance items but chunkier conventional rubber. They are an odd choice – fitting eco tyres might have allowed the SE Insight to creep inside the 100g/km barrier where a tax disc is free, rather than loitering at 101g/km where you still have to pay, albeit only £15.

As we head home we feel a little disappointed that the Insight didn’t feel special enough – a Civic Hybrid or a Prius justify their extra price with a lot more polish. But there’s no denying that Honda has fulfilled its aims. It has created a cut-price hybrid that should deliver where it really matters – at the pumps.