Volkswagen up!
The only way is up! Or that's what Volkswagen is hoping city car buyers will say, when they consider the new car against rivals such as the Fiat 500 and Hyundai i10.

Originally shown as a concept in 2007, the up! is definitely a car of its time, with Volkswagen predicting sales of small cars like this one increasing by 20 per cent over the next five years, as people embrace small cars that can carry four people and are fun to drive.

So, with sales of this new dinky motor beginning in spring 2012, does it live up to its impressive billing of being a "concentrated Volkswagen?" I headed to Rome for the International launch to find out.

After the forgettable Fox, the new baby Volkswagen gets off to a great start with the crisp exterior styling.

The work of both Walter de Silva and Klaus Bischoff, it remains faithful to the concept with its big wheels (14-inch even on the entry-level Take up! version) which are moved to the four corners of the car, the big wheelarches, the short overhangs and the lower than you'd expect roof height.

Volkswagen up!
For me, the neatest parts of the up!'s design are the strong, 3D graphic round the side windows which are steeply upswept at the back and the glass rear tailgate, which Volkswagen claim is inspired by modern flat-screen TVs.

The up! is also one of the few cars to have a face, which I think adds to its cheekyness. With the circular elements of the headlights looking like eyes, the Volkswagen badge the nose and the grill bumper treatment almost looking like a smiley face.

Move inside and despite the up!'s compact dimensions, the interior is suprisingly spacious with a big car feel. Quality is up to usual Volkswagen standards and the simple dashboard design is elegant.

I tried three different versions of the up! and the gloss white and black dashboard trim of the special edition up! black and up! white give a different classier feel to the car. Though the standard cream finish of the Move up! was the most simple and honest.

Volkswagen up!
Some of the instruments, such as the rev counter might be smaller than the Volkswagen norm, but they are beautifully detailed and easy to read. The switchgear placement is also sound.

I'm over 6ft tall and found it easy to get a decent driving position; the high-backed single piece front seats are also comfortable. This was despite the lack of reach adjustment for the steering column. All round visibility is excellent too.

Despite me sitting in the front of the up!, I'm sure there would be enough rear room for a couple of adults to travel in reasonable comfort. This is down to the 2,420mm wheelbase. There's also a reasonably practical 251 litre boot, which is 66 litres bigger than a Fiat 500 and features a clever false floor to hide valubles out of sight.

Take up!, Move up!, High up! and limited edition up! black and up! white will be available with prices starting from £7,995. Standard equipment on all models includes front and side airbags, CD radio with aux-in and rear ISOFIX points.

Options are made up of simple packs; these include a Driver's assistance pack (£400) which has the clever City Emergency Braking system, that will stop the car automatically at speeds of up to 18mph, when it senses you're unable to do it yourself.

Volkswagen up!Another key option is the "Maps & More" touch screen navigation, which is basically a portable Navigon sat-nav and MP3 player (a £300 cost option) which fits to the top of the dashboard.

The up! is powered by a choice of new 59bhp or 74bhp three-cylinder 1.0-litre engines. I got the chance to drive both and was impressed by the refinement and torque of these three-pot engines.

As expected, they have low emissions and sip fuel, with the 59bhp version boasting 105g/km CO2 figures and a 62.8 combined fuel consumption figure. The more powerful 74bhp version has 108g/km CO2 figures and a 60.1 combined fuel consumption figure.

Not green enough for you? A Bluemotion version will be available at a later date, with expected 97g/km emissions and a 67.2mpg fuel consumption figure.

The only problem I have with both engines, is that because of the long gearing, they are lethargic accelerators. To get the best out of both engines, you have to use the gears and rev them a lot.

Volkswagen up!
Like the engine, the ride is generally refined and composed. Only bigger bumps seeming to upset the little Volkswagen. However, despite the supple ride, body roll is kept well in check, the steering accurate enough and light enough for town work and the brakes are strong.

So is this the best small car on sale? Yes, as there's much to like including the neat styling, quality feel and the fact that all versions are good to drive. However, a lot of key equipment is included in the option packs and if you spec too many of those it could get expensive.

Apart from the leisurely acceleration, the only other feature I wasn't keen on was the "Maps & More" touch screen navigation. The removable Navigon unit didn't feel up to the quality of the rest of the cabin, was difficult to read and fiddly to use.

Overall though, with the up!, Volkswagen could have created what is possibly the most fun and funky small car.