In the summer of 2015, from a Volkswagen perspective, the automotive world seemed largely okay. The factories were humming, and engineers were working on high-performance projects such as the Golf R400 and luxury models like the next Phaeton. Then the diesel scandal struck, and Volkswagen was turned upside down. The fallout saw a strategic shift toward electric mobility and the culling of many high-performance programs. One that did survive, however, is the Up! GTI. (Okay, we’ll drop the pretentious exclamation point that VW adds to the Up’s name from here on out.)

It has taken VW an unusually long time to bring the Up GTI to market. We drove a prototype back in early 2012, and we were expecting a market launch by 2014. But 2014 came and went, and finally in mid-2016 we were treated to an 89-hp TSI version of the Up, fitted with a 1.0-liter three-cylinder, a five-speed manual, and a rather comfort-oriented suspension. Although we appreciated that lukewarm model, it was no GTI.

But now the Up GTI has finally arrived. It stands on a wider track and 17-inch wheels and wears black-and-red exterior accents as well as a roof spoiler, making this car about as cheeky as a mini car can get. Inside, there is the characteristic plaid GTI fabric with red stitching on sportier but still comfortable seats.

Volkswagen points out that, at 114 horsepower, the Up GTI is about as powerful as the European version of the original Mark 1 Golf GTI, sold as the Rabbit GTI in the States. That’s a good comparison, but a more recent precursor to the Up GTI was the Lupo GTI, a Ferdinand Piëch favorite, which was launched in Europe in 2000. With 123 horsepower and brimming with then high-tech features such as bi xenon lights and aluminum body parts, it was the coolest car in the segment; it’s fast becoming a collector’s item in Europe.

For the Up GTI, squeezing another 25 horsepower out of the tiny EA211 turbocharged three-banger was no easy feat, say the engineers. This is the first VW engine to be certified according to the most recent, ultra-challenging European emissions standards. The hardware is almost identical to the 89-hp version, although the pistons have been modified, fuel-injection pressure is increased, and the turbocharger features a different geometry.

VW had to overcome the increased back pressure of the new exhaust system featuring two catalytic converters, one of which also serves as a particulate filter. The exhaust treatment not only saps power but has another disadvantage: It makes this car even quieter, so VW had to resort to artificial sound enhancement inside the cabin. But unlike many other overly synthesized examples of this technology, the Up GTI’s actually works well, augmenting the characterful, sonorous sound of the three-cylinder engine.

We wish the engine’s response was more aggressive, but turbo lag at least is kept largely at bay. The peak of 148 lb-ft of torque is available from 2000 to 3500 rpm, but the three-banger still excels when revved beyond 4000 rpm; in the upper reaches of the tach the engine feels lively and sporty. The only transmission offered is a six-speed manual, which is exclusive to the GTI, and it works beautifully. However, straight-line performance remains rather modest: The Up GTI can reach 62 mph in 8.8 seconds, according to its maker, and tops out at 122 mph.

The GTI’s engine is clearly superior to the version in the Up TSI, but the chassis has made an even greater leap. The steering is more direct, the GTI sits 0.6 inch lower on a firmer suspension, and the anti-roll bar is stiffened by 30 percent. The wheel offset also is greater, and the track has been widened as much as possible without necessitating modifications to the body.

All the effort has paid off. This Up feels a lot stiffer, the tendency to understeer has been greatly reduced, and the steering is connected and direct. We also love the strong brakes. Behind the wheel, one feels instant harmony with the car and the road, and even though the Up GTI doesn’t deliver rocketlike straight-line acceleration, it’s truly fun to drive.

The only serious competitor to the Up GTI is the Fiat 500 Abarth. The raucous Abarth is more powerful but severely lacking in refinement, and we’d be tempted to choose the sophisticated VW instead. Alas, that’s a choice that won’t be offered to buyers in the United States. For now, you’ll have to take our word for it: At least in some corners of Volkswagen’s Wolfsburg headquarters, the good times are still rolling.