Paddon, the reigning Production Car world champion, trailed Craig Breen following the opening superspecial in Lisbon but moved in front on the first all-gravel night stage.
The New Zealander’s advantage over the Irishman, in a Fiesta S2000, after four stages is 24.6s. Saudi driver Yazeed Al Rajhi is third in his Fiesta Regional Rally Car with Portugal’s Pedro Meireles (Mitsubishi Lancer) fourth and Maciej Oleksowicz, from Poland, fifth in another Fiesta.
“We took a risk by going with the soft compound tyre,” said Paddon. “On the last two stages it was too soft in the second part of the stages and we were losing a lot of time. But I’m happy to be leading, I like the night.”
SWRC points leader Breen, who is competing in the series after winning the inaugural FIA WRC Academy in 2011, said: “We had big trouble on stage two in a water crossing when the car dropped onto three cylinders. It was a big fright and I thought my rally was over. I didn’t push flat out on the last two because it was tricky in the dark because you can’t see your landmarks. I’m happy to have got here.”