The time of the small car has arrived. Budget-conscious drivers are ditching their SUVs for less gas-thirsty models. American carmakers, who have traditionally focused their attention on trucks and SUVS, have been the hardest hit by this trend. Over at General Motors, second quarter North American sales were down 20 percent over last year.

On the bright side for GM, sales of small cars like the Chevy Malibu were up significantly during the same period. Such a trend may bode well for the completely redesigned Pontiac Vibe.

All new for 2009, the Vibe is the fraternal twin to the Toyota Matrix, different only in exterior styling. Sporting clean lines, large wheels, and what GM refers to as a “faster” windshield, the new Vibe is distinctive in appearance, perhaps a bit polarizing. Those looking for more conservative styling may find Matrix more to their liking.

Inside, the two are similar, featuring intuitive controls and quality materials. The rear seat splits 60/40 and the front passenger seat folds flat (in all but the base model) to create even more cargo room for longer objects. The tall stance allows for plenty of passenger comfort, and a respectable 49.4 cubic feet of storage space will accommodate plenty of whatever you need to haul.

The Vibe is available in 1.8L or 2.4L base models, all-wheel drive (AWD), and as a GT. The standard engine is a 1.8-liter producing 132 horsepower. Most buyers will want to upgrade to the 2.4L with the 1SB package, which comes with a more powerful 2.4-liter 158-horsepower engine, a fold-flat front passenger seat and a rear cargo organizer. The all-wheel drive version comes with the same engine, plus a four-speed automatic in place of the five-speed manual. A five-speed automatic with Driver Shift Control is optional ($1050) on the GT. Air conditioning is optional ($950) on both base models, standard on the AWD and GT.

Popular option packages include the Preferred Package ($1070) with remote keyless entry, power windows and door locks and variable intermittent wipers (on the 2.4L and the AWD); and the Sun and Sound Package ($1285, requires Preferred Package) with power sunroof, MP3/iPod auxiliary input jack, Monsoon seven-speaker audio system, leather-wrapped shift knob and steering wheel with audio controls. The GT comes equipped with all of the package features as standard equipment.

I drove the GT with the five-speed automatic and power sunroof ($700) options. The engine is the same as that in the Toyota Camry and Scion xB, accelerating smoothly and quietly up to highway speeds. Handling is excellent with minimal body roll.

Safetywise, Vibe features active head restraints, a full complement of airbags (including dual-stage front airbags with passenger sensing system), stability control, tire-pressure monitoring system, and OnStar. It has not been tested by the National Highway Traffic Safety Administration or the Insurance Institute for Highway Safety.

Overall, the new Vibe is an impressive small vehicle. With it’s versatility, cargo and passenger room, and the availability of all-wheel drive, it has many of the admirable qualities of a small SUV, but with a sportier ride and practical fuel economy.