The only way is Up! VW's concept car epitomises minimalist glamour

Last week, this column announced the Car of the Year for 2010 and expressed disappointment at the unadventurous nature of the winner. That car was the Volkswagen Polo. If, however, the car you see here had been on sale now, this column's tone would have been very different.

Same company, radically cleverer car, similar Car of the Year outcome almost guaranteed – but this time with feeling. The Volkswagen Up! Lite is the most frugal four-seater currently inhabiting the planet, thanks to its featherlight design and hugely economical power unit. It's just a concept car at the moment, but it points the way to Volkswagen's new range of small cars planned for launch from 2011.

The headline figures are these: 65g/km of CO2, 115.8mpg on the official combined-driving test cycle. Yet, given their head, the two-cylinder, 800cc turbodiesel engine and the 13bhp electric motor can pool resources to pull the Up! Lite from a standstill to 60mph in 12 seconds and on to a 100mph top speed. Pressing an Eco button reduces the engine's normal 51bhp output to 36bhp, and it is in this mode that the remarkable economy can be achieved.

There's a chance it might almost be achievable in the real world, too, because the muscular power-delivery characteristics of a diesel mean you don't have to work the engine hard just to keep up with the traffic flow – and having an electric motor ready to fire an extra pulse of accelerative energy when needed helps all the more.

The motor is also used to start the engine and to charge the battery whenever the Up! Lite is slowing down or braking. You can also drive slowly, and for a short distance, on the electric motor alone, so the Up! Lite is a genuine hybrid. It all sounds too good to be true, but ultra-slippery aerodynamics (the drag coefficient is just 0.237) and its light weight (just 695kg) are the key. A fuel tank containing just 20 litres is one way of saving weight. Aluminium panels are another, and the Up! Lite's roof is a carbonfibre moulding which weighs just 3.3kg.

Gregor Dietz, Volkswagen's guru of "dimensional product layout", says that carbonfibre gets very expensive when used for structural parts. "But if it is geometrically simple, and it's painted so you don't have to finish the surface, it's reasonably cheap."

Cut now to a conversation with Klaus Bischoff, Volkswagen's chief designer. What will the first in the range be like when we see it in a couple of years' time? There have been other Up!s; the original three-door car, taller and squarer than the low, racy Lite, was shown with a Smart-like rear engine, and it was followed by the Space Up! Blue which was a lengthened, mini-MPV version with an electric motor and a 120-mile range on one battery charge.

Bischoff says the first production Up! will be a three-door, shaped not like the Lite but instead resembling the original Up!, except that it will have front-wheel drive like the Lite. So what happened to the rear engine idea? "It had aerodynamic problems and was unstable. To make it a front-wheel drive car we had to make almost all of it again, but it looks almost exactly the same."

A five-door Up! will follow, although not as voluminous as the Space Up! But the epitome of minimalist glamour will surely be the Up! Lite in production form, especially if it contains some of the concept's features.

We'll start at the front. The air intake automatically shuts unless extra airflow is needed. The bonnet is fixed shut to avoid turbulence. Instead there's a sliding panel in front of the windscreen to access various reservoirs. The wheels are a combination of thin aluminium rims and slender, concealed carbonfibre spokes with an outside cover.

Inside it is stark but it looks anything but cheap. The rear seats contain a stroke of genius – the ability to fold down simply by pulling a headrest up and forward.

But the dashboard is the best bit. The selector for the double-clutch, seven-speed gearbox is in the form of a mouse-like handrest, to make it easier to manipulate the iPhone-like touch screen. The idea, to be applied across all Volkswagens eventually, is that you could download "apps" for the Up! as you might for your phone, and the car becomes your interface with the electronic world. Meanwhile, the Up! Lite also tells you in great detail about your energy usage and CO2 output.

"That would make it fun," says Bischoff, "because the car is not very fast and the two-cylinder engine doesn't sound pleasing at low revs. The fun's in saving the fuel. Well, it could be fun."

Perhaps. One thing I do know: if the Up! Lite does go on sale in something like this form, I'll just have to have one.

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