A few weeks ago, we took a look at the origin of the Volkswagen Golf, the front-engined, front-wheel drive hatchback that likely saved Volkswagen from extinction. Of course, the Golf begat the GTI, the original hot hatch, and standard-bearer of the segment. But while the Golf has become one of the most popular cars in the world, and the GTI is universally respected as one of the world’s great driver’s cars, it once had some pretty stiff competition. Yes, the current Mk VII car has to compete with the likes of the Ford Focus ST, Subaru WRX, Mini Cooper S, and Honda Civic Si. But back in the ’80s, it wasn’t just fighting for hot hatch supremacy, it was fighting for its name.

Its rival? The Peugeot 205 GTI. And you know what? The Peugeot may have been better.

Like Volkswagen, the changing world of the 1970s made things difficult for Peugeot. Its venerable 504 and 505 sedans were popular all over the world, but the success of the 4 and 5 hatchbacks by rival Renault were reshaping the way Europeans drove, and affecting sales at home. Sedans were rapidly falling out of favor with buyers, as hatchbacks offered more room and utility, and were usually more affordable. Peugeot had the compact 104, but it wasn’t offered with a hatch until 1976, but by then it was already old, and the Golf had hit the scene as well. Between Renault’s success, and the popular avant-garde models offered by Citroën, Peugeot found itself with a stodgy, conservative image, and an eroding customer base.

In an attempt to diversify, it took over Citroën in 1975, and bought Chrysler’s European division in 1978. But both companies were hemorrhaging money, putting Peugeot in an even tougher situation. However, Chrysler Europe had experience in building small cars, with the British Hillman Imp, and the French Simca Horizon (which was retooled for America and sold as the Dodge Omni/Plymouth Horizon). It started a crash program to field a purpose-built hatch of its own, and in February 1983, released the 205. It was an immediate and much-needed success. 

The 205 was a breath of fresh air, with a crisp, modern design with in put from Pininfarina and an upmarket interior styled by Paul Bracq (the man behind the Mercedes 600 and W113 SL-Class). It was smaller outside than most of the competition, but just as roomy, thanks to a carefully packaged fully-independent suspension. That suspension also made it handle far better than its competitors, which made it ripe for a performance version.

Peugeot didn’t phone in a 205 performance package either. When it was released in 1984, the 205 GTI caused almost as much of a sensation as Volkswagen’s GTI had eight years earlier. It had unique alloy wheels, fog lights, and an outrageous red and gray interior. But the 205 GTI’s centerpiece was its 1.6-liter inline-four, which was good for 105 horsepower (over twice the power of the base version), which gave the 1,900-pound car a then-impressive 8.7 second zero to 60 time, and a top speed of 114 miles per hour.

Still, the 205 GTI was never supposed to be a straight-line bruiser. Much like the Ford Fiesta ST is today, it was a giant-killer in the corners. On switchbacks and twisty roads, the Peugeot’s independent suspension and light weight made it incredibly tossable, characteristics that allowed it to outpace some of the era’s supercars.

In 1986, a second 205 GTI was introduced, the 1.9-liter model, which offered 15 extra horsepower and a little extra torque, but at the expense of over 100 pounds. As a result, there’s a sharp divide in the 205 GTI community over which car is better, the better-balanced 1.6, or the more powerful 1.9. 

In the mid-’80s, European automakers from MG to Ferrari were scrambling to compete in Group B rally racing, and Peugeot was no exception. In 1986, the company debuted the T16, a mid-engined rally-fighter that looked like a flared 205 GTI on the outside, but shared nothing with it but the windshield frame. In rally form, the 1.8-liter turbo cranked out nearly 500 horsepower, and could take the car from zero to 60 in under four seconds. But Peugeot needed to homologate the cars, so a 197-horse street version was made available to the public. With just 200 cars built, the T16 is the rarest (and most powerful) 205 GTI out there, and can fetch six figures when it changes hands.

But the T16 wasn’t the only 205 GTI variant made. On top of the 1.6 and 1.9, Peugeot offered the CTI, a convertible version of the car, from 1986 to ’92, and from ’88 to ’92, the Rallye, a stripped-down version of the 1.6 for budget-minded buyers. The 205 GTI didn’t change much over the years, but a new dashboard came in 1988, smoked taillights and a black interior came for 1990, and a catalytic converter came in ’93, marking the biggest changes throughout its lifespan. GTI Production ended in 1994, while the base 205 soldiered on until 1998. Peugeot has carried on with GTI models since, but none have been able to have the impact that its original car did.

Despite having a cult following in the U.S., you could argue that the hatchback never really broke through in America until just a few years ago. We never had the opportunity to see the 205 GTI in its glory, and that’s a shame. Millions of American gearheads fundamentally “get” the Volkswagen GTI because its been here for 33 years. But despite a small presence in the U.S. until 1992, Peugeot never imported its hot hatch, believing it wouldn’t catch on in the market, and unfortunately, it was probably right.

As a result, we missed out on a performance car that defined a generation over in Europe. Richard Hammond has said: “205 GTi was, and still is, a full-bore, gold-medal-winning legend. Simple. It doesn’t need contextualising with stuff about how good it was at the time, how far it advanced the concept of small, affordable fast cars, or any of that. Just look at the thing – it’s gorgeous.” Jeremy Clarkson agrees, saying: “It didn’t matter which engine you had, the 1.6 or the 1.9. This little Peugeot was fan-bleeding-tastic.” Autoweek has called it “one of the world’s greatest hot hatchbacks,” and when comparing it to a Volkswagen GTI, The Observer said “it’s the sheer joie de vivre of this car’s cornering ability that sets it apart.”

Fortunately for us, most 205 GTIs are old enough to import from Europe and register stateside. And while prices are starting to climb, clean examples can still be had for around $10K. That’s enough for it to earn a spot in our dream garage. Of course, 40 years of Volkswagen’s hot hatch is enough to give it claim to those three famous letters. But Peugeot’s brilliant decade selling the 205 GTI was enough to make a generation of Europeans almost forget about the German hot hatch. It’s a shame we couldn’t have experienced it for ourselves.

Like classics? It’s always Throwback Thursday somewhere.