Seat will introduce a new ultra-small city car by 2011, the company has announced. Based on the forthcoming Volkswagen Up!, Seat’s as-yet unnamed new model will be the spiritual successor to the Arosa.

There is no official word on the engines planned for use in the new city car, but Seat president Erich Schmitt has said it plans to “have hybrids available in the A-segment in the future.”

The new car will be part of the Seat’s dramatic model-range expansion, which will be spearheaded by the new Bolero saloon, based on the previous-generation Audi A4, and the forthcoming Tribu compact SUV.

The microcar will undercut the Volkswagen Up! in price – an impressive achievement considering VW’s stated aim of pricing the base Up! at around €6000 when it goes on sale in Europe.

Seat’s city car is a key part of the company’s “2018 strategy”, a plan to expand the corporate portfolio to up to 40 models within the next decade, with the brand being launched in new market and territories.

Schmitt said: “We are focusing on eastern European countries, but before we can consider launching the brand there we must also concentrate on strengthening the model portfolio and our dealer network.

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Toyota has been working on an affordable small car that will be cost-competitive in emerging markets, and Autocar is reporting that India is being considered as a destination for production. India makes sense due to its low-cost labor, and with competitors like the Tata Nano going for as little as $2,500, the world’s biggest automaker will need to cut cost everywhere it can. There is no word as to exactly what vehicle would be produced in India, but one option is Toyota’s production iQ from Geneva, which is scheduled to begin production later in 2008. Toyota is looking for initial sales of the iQ to crest 100,000 units.

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