The Volkswagen Transporter has, until recently, been acknowledged as the undisputed king of the medium panel van sector, offering a combination of superb build quality, excellent reliability and unbeatable residual values.

But in the past two years the German manufacturer has come under huge pressure, firstly from the new Ford Transit Custom, which won international van of the year in 2012, and then from the new Renault Trafic and Vauxhall Vivaro twins, which have well and truly upped the ante in the sector.

As Volkswagen isn’t ready to facelift the Transporter just yet (one is rumoured to be due later in the year), the company has hit back by offering new variants with extra kit and better fuel economy.

So can the Transporter still hold its head up? With models like the one on test here, the 114bhp BlueMotion, the answer is a definite ‘yes’. Build quality remains exemplary, reliability hasn’t faltered and those residual values are still high.

And this model has the added appeal of 48.7mpg on the combined cycle – a figure undreamed of even five years ago.

Our test model is priced at £19,245 ex-VAT and features Volkswagen’s tried and tested 2.0-litre diesel powerplant offering a sensible 114bhp and 184lb-ft of torque.

Power outputs go right up to 180bhp for the Transporter, but I reckon this version is just about right for fleet purposes. This van didn’t once feel underpowered during the test  week, although admittedly I didn’t climb any steep hills during that time.

In addition to an admirable fuel economy figure, the  Transporter has, as standard, the usual array of safety systems such as electric stablitiy control and anti-lock breaking system, remote central locking with deadlocks, a stop-start system, electric windows and  electric heated mirrors and dual airbags.

Our test model also had a sat-nav system at £678,  Bluetooth connectivity at £282, rubber floor covering in the cargo area at £156 and rear-parking sensors at £264.

In the back, the Transporter offers 5.8 cubic metres of loadspace and a payload of 906kg.

Climbing aboard, it’s easy to see how the Transporter gained its legendary reputation.

All the doors smoothly close in a most upmarket manner, while the driver’s seat is superbly solid and supportive, with lots of packing in the lumbar area. Both seat and steering wheel adjust in all directions so everyone should find a comfortable position.

On the road, the engine feels lively despite its relatively diminutive output, and the van has that pin-sharp handling quality that rivals try to emulate but somehow never quite manage to come close.

One little extra I really liked was the compass read-out  on the dash, which tells you which direction you are travelling in.

It’s a handy little device and I’m surprised that more van manufacturers don’t offer it.