There is no single best vehicle for Portugal. Start with the number of passengers, the amount of luggage and the places you intend to visit.
A smaller car can be useful if your itinerary involves city streets and frequent parking, while families or groups may place more value on luggage capacity and passenger space.
Manual cars are common, while automatic availability and pricing can differ. If transmission matters to you, check it carefully when comparing individual offers.
A 4×4 is not normally required for an ordinary Portugal itinerary using public roads. Whatever vehicle you choose, check the rental conditions before using unpaved or restricted roads.