THE city car is big business today but in the late 1990s the genre was really in its infancy.

Even so there were some bright stars emerging that proved without doubt that small really was beautiful.

One such, and in my view one of the most under-rated cars of its era, was the Volkswagen Lupo.

With a name that translated into Wolf you might think that the Lupo was an unfriendly aggressive car, but it in truth it was a cute cuddly teddy bear of a car that was, as was normal with Volkswagen, very well built.

The name emanated from that spiritual home of Volkswagen, the town of Wolfsburg where the Lupo was made.

Lupo, which lasted until 2005 filled a gap at the bottom of the Volkswagen model range caused by the increasing size and weight of the Polo.

It was essentially a badge-engineered SEAT Arosa and used a shortened version of the Polo/Ibiza platform.

Initially the Lupo was only available in two trim variants, the budget E trim and the upgraded S trim.

However, the range expanded to include a Sport and GTI variant. Petrol engines ranged from 1.0 to 1.4 (1.6 for the GTI) with diesels from 1.2 to 1.7. The differences between the E and S trim included painted door mirrors, door handles and strip, central locking, electric windows, double folding seats and opening rear windows.

An interesting version was the The Lupo 3L was a special-edition made with the intent of being the world's first car in series production consuming as little as 94mpg.

It was powered by a 1.2 three-cylinder diesel engine with turbocharger and direct injection and made use of low-weight aluminium and magnesium alloys for many components. Other fuel saving ideas were low-rolling resistance tyres and stop/start technology.

Indeed, some of the features we find on city cars today.

The3L had an automated electro-hydraulic manual transmission with a Tiptronic mode.

But as with a number of VW models it was not long before a GTI badge was attached and this move made the Lupo really special.

It was even suggested that this car was a natural successor to the Golf GTI Mk1, with it high fully body-coloured bumpers and twin central exhausts. In 2002, a six-speed gearbox was added, together with improved throttle response.

It was really out to net sales from the MINI Cooper and had the wow! factor to do it with a top speed of 127mph and 0-62mph acceleration in 7.8 seconds.

The Lupo did have its detractors, some of whom hated the tiny boot and the price hike over its equivalent SEAT stablemate.

But there is no denying that the Lupo, which was succeeded by the Fox, was a sure indication of the way ahead for the city car we know today.