Five years after BMW AG's Mini created a new premium brand for small cars in North America, it is upping the ante.

The second-generation '07 Mini Cooper and Cooper S went on sale Feb. 17 in the U.S. The Cooper starts at $18,700, a $700 increase from the outgoing model. The Cooper S bases at $21,850, up $400 from '06. Prices include destination charges.

And while the all-new Minis are not obviously different to look at, every panel of sheet metal in the evolutionary design is new, as are the engines.

The unique interior also has been redone, leaving no doubt as to the special nature of this pit bull of a subcompact.

The second-generation Cooper is powered by a new 1.6L DOHC inline 4-cyl. engine, developed in partnership with PSA Peugeot Citroen, that generates 118 hp and 114 lb.-ft. (155 Nm) of torque at 4,500 rpm.

The performance Cooper S' direct-injection 1.6L DOHC I-4 has twin-scroll turbochargers cranking out 172 hp and 177 lb.-ft. (240 Nm) of torque essentially in a straight line from 1,600-5,000 rpm. When accelerating, torque is briefly increased to 192 lb.-ft. (260 Nm) with an overboost function to provide extra punch.

The new 4-cyls. replace the 1.6L Pentagon I-4, designed by former Chrysler Corp., in the first-generation Mini.

The Pentagon — 115 hp naturally aspirated, 168 hp when supercharged — was oft-criticized by BMW as low tech and lacking in performance and fuel efficiency. Mini also was concerned it would not meet increasingly stringent emissions regulations in the U.S. and Europe.

Officials say the new 1.6L, which is fitted crosswise in the new Mini, meets California's Ultra-Low Emissions Vehicle (ULEV II) as well as Euro IV emissions requirements, and provides 12.5% fuel savings over the outgoing model, achieving 32/40 mpg (5.9-7.3 L/100 km) in city/highway driving.

The efficiency gain with the new engine jumps to 20% on the Cooper S, the first DIG for Mini. The turbocharged I-4 gets 29/36 mpg (6.5-8.1 L/100 km) in city/highway driving.

The new engines, louder than expected in test drives, also reflect a move from iron to cast aluminum block and feature electronic throttle control and BMW's Valvetronic dual-phase variable valve timing.

Both the Cooper and Cooper S come with a 6-speed manual transmission and optional 6-speed automatic.

The manual is in the spirit of fun that pervades this vehicle — but, surprisingly, the automatic is faster in drag-strip testing, covering the quarter mile in 15.23 seconds for this reporter — and closer to 14 seconds for the fastest colleague.

Formula 1-inspired paddles on the steering wheel, and an optional sport button, provide a faster electronic controlled gearshift with the automatic that is designed to deliver more punch.

The sweetest ride comes from mating the manual to the turbocharged DIG engine, with the flat torque line through second and third gears. However, climbing mountainous Arizona roads, the car fought for all the torque it could muster.

In terms of ride and handling, engineers worked to improve on the car's go-kart-like delivery.

The suspension is new, with MacPherson spring struts in front with more travel and a multilink setup in back with modified geometry and an additional control arm, recalibrated for improved damper and spring rates. Optional is a sport suspension with stiffer dampers and anti-roll bars.

The result is a huge improvement in ride comfort (helped by all-new seats), evident after hours driving through the desert.

The nimble handling of the front-wheel-drive Mini shows itself on a nearby track and autocross course where the little car corners adroitly, and the wheels, set as wide apart as possible, stick to the blacktop like glue, with minimal torque steer.

Steering is speed sensitive for ease of turning at slow speeds. A sport mode lowers steering forces when parking and increases them for high-speed precision.

The all-new car grows less than 3 ins. (7.6 cm) in length, 1.5 ins. (3.8 cm) of it in the front to comply with new European pedestrian impact safety standards.

The Mini, admired for its innovative interior, outdoes itself with second-generation upgrades. The speedometer now is the size of a wall clock, with enough real estate to cleverly locate audio controls and an optional navigation system with real-time traffic information capability.

The center console tapers to provide more knee room for both driver and passenger. It incorporates climate controls shaped like Mini wings above the cockpit-style series of enlarged toggle switches.

In a much-celebrated move, the dangling cupholder that impinged on passenger space has been replaced by two wonderfully conventional holders integrated in the bottom section of the console.

New ambient lighting sets the mood, and options include Bluetooth wireless capability and an iPod auxiliary outlet in a nod to the importance of the U.S. as the No.1 market for sales.

Mini is attempting to better bundle features into packages, each of them an additional $1,400, with the exception of the cold-weather package for $300.

Safety features include a reinforced body, antilock brakes, traction control, run-flat tires and six airbags — one for every 2 ft. (0.6 m) of car length.

The Cooper rides on 15-in. wheels; the S has 16-in. standard tires and optional 17-in. rims. Other goodies include electronic brake-force distribution.

About 200 accessories are available.

Customers can change the configuration of their car up to six days before the start of assembly, despite the choice of more than 370 features and options in the interior and more than 300 exterior variants among the roughly 2,000 components in each car.

Accommodating this flexibility is a production triangle in the U.K. with a press shop in Swindon, body shop in Hams Hall and final assembly in Oxford.

While officials decline to provide a volume estimate, the all-new Mini should exceed 40,000 sales annually in the U.S.

’07 Mini Cooper S
Vehicle type Front-engine, front-wheel drive, 4-passenger, 3-door subcompact
Engine 1.6L (1,598 cc) DOHC I-4, aluminum block/aluminum head
Power (SAE net) 172 hp @ 5,500 rpm
Torque 177 lb.-ft. (240 Nm) @ 1,600-5,000 rpm
Compression ratio 10.5:1
Bore x stroke (mm) 77 x 85
Transmission Getrag 6-speed manual
Wheelbase 97.1 ins. (247 cm)
Overall length 146 ins. (371 cm)
Overall width 66.3 (168 cm
Overall height 55.4 ins. (140 cm)
Curb weight 2,668 lbs. (1,210 kg)
EPA fuel economy, city/highway (mpg) 29/36
Market competition Honda Civic Si, VW GTI, Chevy Cobalt SS, Scion tC, Nissan Sentra SE-R, Mazdaspeed3