AS the countdown continues to the new Millennium, small cars spell increasingly big business, writes David Duffy.

Escalating fuel costs, higher taxes on larger cars and rising running costs ensure that Mini-sized motors will swell car-maker's profits in the years to come.

While the world awaits the arrival of the Millennium Mini next year, other makers are gnawing chunks out of the supermini class.

And Volkswagen aims to take a bigger bite than most with the little Lupo.

Named after the Latin for wolf - and the factory at Wolfsburg, Germany, where it is built - what it lacks in size it more than makes up with personality.

With prices starting at £7,895, the Lupo is a perfect city car with the ability to stretch its legs on a longer journey.

While a 300-mile trip in a Mini would need the spirit of adventure of Chris Bonington combined with the selfless disregard for comfort of a monk, a similar journey in a Lupo is a delight.

The diminutive frame has the build quality and sophisticated feel of a car far exceeding its modest frame.

The doors are ridiculously large for such a small car, but allow absurdly easy access to the rear seats.

Using the same body as its Spanish sister, the SEAT Arosa, it is a great car for two and you can move four average-sized adults around in reasonable comfort - although you will need to strictly limit luggage to one aircraft cabin-sized piece of hand baggage apiece.

The test model, powered by a 1.4-litre 75 horsepower engine, is the quickest of the Lupo pack, dashing from zero to just over 60mph in 12 seconds.

The zip under the bonnet is matched by a range of fashionable interiors and a list of standard equipment once unheard of in this class of car.

The top of the dashboard is covered in the same trim as used in the Golf Cabriolet, with a raised centre housing air vents in the style of the New Beetle.

Airbags for driver and front passenger are standard as is height-adjustable steering wheel, four-speaker stereo radio-cassette and engine immobiliser.

Power steering is standard on all 1.4-litre and 1.7-litre diesel models and a £450 option on 1.0-litre models.

The option list is similarly expansive, running from air conditioning and anti-lock brakes to heated front seats and alloy wheels.

Another choice on offer to buyers is the arrangement for the rear seat. The standard set-up is a seat split 50:50 with two head-rests. For people commonly carrying three children, the seat can be changed, for a £55 extra charge, to a bench with three headrests and a lap-type centre seatbelt.

Storage in such a small car is vitally important and is given a head start by a shelf that runs clear across the Lupo cabin underneath the dashboard.

Other cubby holes are provided to store money, tapes, a mobile phone and sunglasses. There is even a cupholder.

Other nice touches include blue back lighting for the instrument panel, damped action grab handles and load lashing points in the unsurprisingly compact boot space.

Upmarket options, to be introduced soon on S models, include leather upholstery and a satellite navigation system.

This autumn a 1.4-litre, 100 horsepower, Sport version joined the range.

Volkswagen Lupo 1.4 S

PRICE: £9,555 on the road

INSURANCE: group Five

FUEL CONSUMPTION:

Urban 34 mpg

Extra Urban 56.5 mpg

Combined 45.6 mpg

LENGTH: 139 in

WIDTH: 64.4 in

COMFORT: Good

LUGGAGE CAPACITY: 4.6 cu ft

FUEL TANK CAPACITY: 7.5 gallons

TOP SPEED: 106mph

Story date: Wednesday 24 November

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