INGOLSTADT, GERMANY – Audi engineers and designers have been given the green light to produce a super-efficient small car that replaces the discontinued, slow-selling A2 city car. The unnamed Audi would go up against the new Ford Ka and the Fiat 500, according to’s new small car should be capable of 95 mpg and fewer than 100 g/km, according to Auto Express, which would put the car in the lowest possible tax brackets in Europe.

Engines are speculated to be a pair of two-cylinder, 600cc turbocharged units, one powered by diesel and the other by unleaded. An all-electric version has already been given the go-ahead.

Industry sources expect the city car to be front-wheel-drive and front-engined, unlike the smaller Smart ForTwo. Initially, sales in North America aren’t very likely, though Audi might test the waters in Canada — a market prone to purchase small cars — and then import the car to the United States, according to