Not just that, but the $13,990 VW Up! is the first sub-$15,000 car with five-star safety and the first tiddler you would actually recommend to your best friend.
It's not perfect, with no chance for an automatic gearbox and Bluetooth only an option, but it is a tiny tot that feels solid, gets along reasonably well, and should be more than just a disposable car at trade-in time. It also has a significant first for the size and price - a radar-guided anti-collision system that can even brake automatically at up to 30km/h if it senses an imminent crash.
Explore the 2012 Volkswagen Up! Range
Pricing for the Up! is even sharper than expected, with the bottom-line $13,990 three-door car coming with remote central locking, electric power steering, aircon and a full-sized spare.
It costs $14,990 to get into the five-door Up! - only a $500 advantage over the recently-tweaked Ford Fiesta - with just five extras including special paint at $500 and Maps+More including Bluetooth for $500. The Up! slides in below the Golf and Polo, measuring 500 millimetres shorter than the Polo and handily undercutting its $16,990 starting price.
It is likely to spark a rash of truly tiny city car arrivals in Australia and Volkswagen is confident it will be popular with a range of people, from first-car buyers to seniors and people who are usually secondhand shoppers.
"We have seen there is potential for this car in Australia, and it can create a segment of its own. People in Australia are downsizing more and more. We make it more affordable and bring safety," says Anke Koeckle, managing director of Volkswagen Group Australia.
The Up! starter looks really good against a tiny-box Suzuki Alto at $11,790, a Korean-made Holden Barina Spark at $12,490 or even a 1.2-litre Nissan Micra at $13,490. Things get murkier when you chase down rivals for the costlier 5-door model, especially the Fiesta which now starts at $15,490 after a $1500 price cut that also added extra airbags. But most people are going to be going for the $13,990 bottom line, and the car has all the right stuff to easily justify that sort of spend.
It's only a four-passenger car, but that's what you expect in something that's only 3.5 metres in length and only weighs 880 kilograms. The only remaining question for Up! shoppers is the running cost, but Volkswagen says it uses 95-octane, not the costlier premium, and Carsguide expects an imminent announcement of capped-price servicing costs for the car. This will definitely make a difference and also brings Volkswagen into line with rival baby cars from the Korean companies and Nissan.
The Up! is a simple little car with a 1-litre, three-cylinder engine in the nose, a four-seater cabin that's just big enough for the job, a reasonable boot and full-sized spare. When the idea for the Up! was first floated, as a return to the people's car package that began the Volkswagen brand, the concept cars were actually rear-engined. But that idea passed quickly, mostly because of the difficulty in make it work for crash safety and assembly.
There is nothing advanced on the technology front, at least in the body and chassis, but Volkswagen is brining the City Emergency Braking system as standard for Australia. It uses a forward-facing radar inside the windscreen to detect imminent collisions and can brake automatically in what VW says it is a major advance. The engine makes a meagre 55 kiloWatts of power and 95 Newton-metres of torque, but the Up is light and VW says the fuel economy is 4.5 litres/100km running on 95.
The Up! is a box. There is nothing special at all about it, although the designers have tried to inject a big of personality with a smiley face on the nose. Otherwise it's about jamming the biggest possible cabin into a car that's less than three metres in length, including a split-fold rear seat, a boot with adjustable-height shelf to vary the capacity, and that full-sized spare. The cabin is typically Volkswagen and typically Germanic, which means efficient and not particularly inviting.
But when you look around it has everything you need, with a couple of nice touches - like the flat-bottom steering wheel - to relieve the hard plastic and painted metal surfaces. The back windows don't roll down, but pop out, which is probably not good for rear-seat passengers but saves money and allows more side space for crash protection.
The Up! has already hit the five-star standard in Europe - with a special award for the City Emergency package - and VW says the result will be mirrored in Australian testing, which is already underway.
It only has four airbags, with no head support for the rear, but there is that radar system, audible seat belt warnings, and the usual ESP and ABS, but with only drum brakes on the rear.
The Up! looks nice enough and the first impression is good. The doors shut with a thunk, the turning circle is tiny, but the boot is surprisingly roomy. It's not a particularly brisk drive, but it gets along well in traffic and - provided you're prepared to use the gearbox - is quick enough for suburban roads and highway cruising at 110km/h. The braking is solid, it grips pretty well in corners, and all the controls and light and easy to find.
There is some suspension clunky over low-speed potholes, and it's never going to win a cornering contest, but the ride smoothes over 80km/h and its fairly quiet. We'd much prefer to have the choice of an automatic, but the Up! is what it is. That means it has to be compared against its size and price rivals, where it comes up a winner.
You can say that it will cost $17,000 to put a fully-loaded Up! on the road, but that would be a tasty little car with equipment you cannot get in something like an Alto or a Spark. It feels more substantial - read that as safer - than an Alto, Spark or Micra, as well as having parts and assembly work that lives up to the Volkswagen badge. It's not a Polo or a Golf, but it's impossible to build that sort of car for $13,990.
So what you get is an Up! that resets the bar for the smallest cars sold in Australia today, and in a good way. It deserves four Carsguide stars, not when you think about cars as classy as a Benz C or a Porsche 911, but because of how it relates to its direct rivals, and the way it beats them.
The Up! has just joined the shortlist for this year's Car of the Year judging, as well as winning a rare four-star tick from Carsguide.
Price: from $13,990
Engine: 1-litre 3-cyl petrol, 55kW/95Nm
Transmission: 5-speed manual