VW is targeting urban drivers with its newest sub-compact two-seater. The car will be built off of the Up! car platform but will be significantly smaller. The car is aimed directly at the Smart Car, but with a few minor differences.
The Up variant will feature a 1.0-liter three-cylinder diesel engine with about 47 hp. With this engine, the VW is said to get the equivalent of 113 mpg (European cycle). While the Smart Car places its engine and transmission at the rear of the car, the Up variant will have a front mounted engine and transmission. This was one of the big changes from the Up! concept that engineers fought against.
There will also be two other vehicles built off the Up platform. Both of them will be bigger and be four place cars. One will be a coupe variant and the other a four door.
Source: Auto Motor und Sport