SANTA BARBARA – Let’s be blunt: Mitsubishi Motors Corp. needs the ’08 Lancer badly.

Barely more than a year ago, there was almost daily speculation regarding the Japanese auto maker’s survival. But operating losses now are being curbed, and company officials are speaking optimistically about the progress of the company’s fourth revitalization plan in seven years.

But the fact is, Mitsubishi could use a winner – particularly in the vicious U.S. market.

The Raider midsize pickup has been anything but a pick-me-up. And the all-new, recently launched ’07 Outlander, the first vehicle to sally forth with Mitsubishi’s latest design theme, seems to have been smothered by the avalanche of new cross/utility vehicles.

Mitsubishi Motor North America Inc. finished 2006 with 118,558 sales in the U.S – barely a third of the 323,706 vehicles it sold in 2001, Ward’s data show.

For 2007, Mitsubishi is counting on its stalwart Lancer subcompact for its rejuvenation. And the auto maker might just have something in the all-new, ninth-generation ’08 model.

The ’08 Lancer is sharper to drive and more assertively styled to attract young car buyers than Honda Motor Co. Ltd.’s revitalized and howlingly successful Civic. And what little it gives away in sheer exuberance to the refusing-to-age Mazda3 and its devilishly sublime chassis, the new Lancer wins back with a more contemporary interior with better materials.

The Lancer’s new 2L DOHC I-4 – one of the World Engine 4-cyl. family co-developed and built with DaimlerChrysler AG and Hyundai Motor Co. Ltd. – is up to the class standard for refinement and power.

Its 152 hp, regardless of whether it appears in the DE, ES, or GTS trim, beats the Civic by 12 hp and the Mazda3’s 2L by four ponies, falling just shy of the Mazda’s 2.3L upgrade 4-cyl. and its 156 hp. Torque ratings are so close among the three, the differences are undetectable; the Lancer makes 146 lb.-ft. (198 Nm) at 4,250 rpm.

What’s most surprising is how much lighter on its feet the Lancer feels in comparison with the Dodge Caliber. The C/D-segment platform used by both was developed in conjunction with Mitsubishi’s former part-owner DaimlerChrysler.

The basic responses of the Caliber, even with its stronger 2.4L variant of the 4-cyl. World Engine, typically don’t exceed wooden. The Lancer, derived from the same front MacPherson strut, rear multi-link suspension architecture, somehow avoids the plodding dynamics of the Caliber.

That thought extends to Lancers with the optional continuously variable transmission, instead of a conventional torque-converter automatic, a first for Mitsubishi in the U.S.

The CVT almost single-handedly demolishes any hope of a Caliber getting out of its own way. But the Lancer at least manages to make the experience bearable, if not particularly pleasurable.

CVT devotees will want the GTS, with a variant of the tranny that incorporates Sportronic programming to allow sequential shifting through six “virtual” gears, which the CVT, owing to its design, deliberately doesn’t have.

The CVT may be more efficient than a torque-converter automatic, but it is outclassed by the conventional 5-speed automatics available in the Honda and Mazda rivals. And we reckon the 6-speed automatics that inevitably will migrate into the segment will all but negate any fuel-economy benefit delivered by the still rubber-bandy CVT.

The Lancer’s standard 5-speed manual is the wiser choice, with a clean and light action that is less industrial than the Mazda3’s but perhaps not quite as polished as the Civic’s.

With it, the Lancer gets to 60 mph (97 km/h) in about 9 seconds, a non-threatening time that leaves plenty of room for improvement from the coming Evolution high-performance variant later this year.

The Lancer’s rack-and-pinion steering is generally delightful, pointing the front tires with accuracy that isn’t sullied by over-zealous power steering assist or too-quick gearing that sometimes is passed off as “responsiveness.”

Engineers specified a more rigid rack mount, and there’s a special backflow valve in the steering gear to negate kickback.

The Lancer’s chassis really can’t be faulted, particularly when equipped with the optional 18-in. wheels. Maybe it’s the extra body-stiffening pieces; their placement suggested by the current Evo, or the 56% increases in torsional and bending rigidity, or the generally balanced suspension tuning of both the ES or the GTS.

The only letdowns is that the antilock brake system is optional for the entry DE trim, which also is saddled with drum brakes at the rear.

OK, so the segment’s enthusiasts won’t be disappointed by the Lancer’s dynamics, particularly the GTS. But everyday folks are swayed by style and accouterments, and here the Lancer also makes the segment leaders take notice.

The sedan-only sheetmetal is an acceptably faithful stamping of the ’05 Concept X car that had nary a critic. Some of the Concept X’s most radical creases are gone, but the look is artfully adapted.

Mitsubishi admits inspiration from the widely acclaimed Mazda3, as well as the Alfa Romeo 156.

Fine on both counts. Our first medium-distance sighting of the car had us thinking Lexus IS – an impression aided by the fact the new Lancer is almost 3 ins. (7 cm) wider and 2.3 ins. (5.8 cm) taller than the previous-generation car.

The shape’s primary appeal is aggressiveness without pretense. Its design is self-confident in a way that is different, though not necessarily better, than the Civic and Mazda3.

Everything else in the class – excluding the Caliber – now looks archaic compared with the Lancer, Mazda3 and Civic; Nissan’s dreary all-new Sentra already wimpers “I give up” compared with the Lancer.

Equally satisfying is the interior, at least in terms of style, fit and material choice. There’s a refreshing restraint in the broad arc of the Lancer’s unadorned dash and minimalist center stack.

Those vast expanses of plastic can be deadly in economy cars, but the Lancer’s upper dash, a largish, unbroken single piece extending to the windshield, is crafted of uncharacteristically rich-looking and textured plastic, bordered on its bottom edge by a tasteful brushed-metal-look strip.

The gauge cluster, steering wheel and minor switches, for the most part, also give off a refreshingly premium perception.

The only letdowns are grim black monotones for almost everything and flimsy plastic for the center-console’s cupholders, real estate in which we’ve come to expect garish cost-cutting, even in vehicles of much more expensive stripe.

The Lancer’s interior is more mature and less gimmicky than the Civic’s; markedly more upscale, in all senses, than the garish Mazda3; and embarrassingly schools the materials-pickers for its platform cousin, the Caliber.

Lancer goes on sale sometime in March, with pricing undisclosed as of press time.

One interesting note: the ’08 Lancer is one of the first vehicles with which to make reasonably direct comparison of fuel-economy figures based on new testing procedures instituted by the Environmental Protection Agency for the ’08 model year that are expected to markedly reduce official fuel-economy numbers.

The “old” Lancer, which is close enough in size to the ’08 model to make for decent comparison, achieved a city-cycle rating, under the old testing system, of 25 mpg (9.4 L/100 km) and a highway rating of 31 mpg (7.6 L/100 km).

The new ’08 Lancer, with a 2L 4-cyl. that is 32 hp stronger than the outgoing 2L, gets 22 mpg (10.7 L/100 km) in the city and 29 mpg (8.1 L/100 km) on the highway.

These figures are better than the 20% or more reduction that has been speculated for most vehicles tested by the new EPA drive cycles that include higher speeds, quicker acceleration and use of air-conditioning, among other factors.