The standard engine only delivers 126 horsepower, but it revs nicely. And for those who enjoy shifting a lot, it's fun to drive when equipped with the manual transmission. Shifting the manual transmission is smooth and easy. Although it might at first appear that the upright seating position and the high-mounted gearshift would take some getting used to, this is not the case. Equipped with the five-speed manual, the Matrix with the standard engine gets an EPA-estimated 29/35 mpg City/Highway.

Even with the automatic transmission the Matrix feels peppy around town. The engine is buzzy, which will appeal to younger buyers but might become a little annoying to older people. The Matrix with the automatic gets an EPA-rated 28/34 mpg.

Steering is precise. And though the center of gravity is relatively high, the Matrix doesn't lean much in corners. The brakes are effective as well. All in all, it feels like a sporty compact car. That's not surprising as it uses many components straight from the sporty Toyota Celica.

The XRS with the 164-horsepower engine offers better acceleration performance, but you have to be willing to work the six-speed manual. The power increase comes from improved breathing by using Toyota's variable-valve timing and lift setup. At low revs the engine delivers no more performance than the standard 126-horsepower engine. The real power comes into play between 6000 and 8400 rpm, so you need to keep it wound up in the upper part of the rev range to tap into its performance. The six-speed gearbox comes from the Celica complete with the same gear ratios. However, the Matrix uses taller tires than the Celica effectively giving it taller gears. So you need to wind it up before shifting into the next gear to enjoy good acceleration performance. We quickly grew tired of the high-revving engine, however. We found that the XRS was not nearly as pleasant as the XR. The 126-horsepower engine seems a better match for the Matrix than the high-strung 164-horsepower engine. Matrix XRS is rated 25/32 mpg.

All-wheel-drive Matrix models offer superior traction on snow, ice and on slippery pavement. Though peppy, they aren't as sporty as the two-wheel-drive models. Part of that is packaging. All-wheel drive is only available with an automatic transmission and the standard engine. Another part of it is the power-to-weight ratio. With more weight (185 pounds) and slightly less power than the front-drive models (123 horsepower vs. 128), plus the friction from the all-wheel-drive system, the AWD models do not accelerate as quickly. They're still peppy, though. Fuel economy suffers as well. The Matrix XR AWD automatic is rated 26/31 mpg. The AWD models do comply with LEV-II evaporative emissions, however.