ONE of the biggest deals in motoring in 2012 has just arrived and it is wrapped in a remarkably compact package.

Volkswagen’s new city car, the Up!, might be one of the smallest four-seater cars on the road, but it is a real car, with a surprising amount of space inside.

There is genuinely impressive room for four adults, and the boot is very deep, with a removable split-level floor, which will store a serious amount of shopping.

The Up – I can’t be doing with that exclamation mark – is VW’s first real attack on the sub-Polo-sized city car market. There have been the Fox and Lupo in the past, but neither had that feeling of robust solidity you associate with Volkswagen. The Up does.

VW sees it as a rival to the Toyota Aygo, Citroën C1, Peugeot 107, Fiat 500 and Ford Ka. But in space alone, the Up is in a different class.

This sector of the car market already accounts for about one in 10 cars sold in the UK – a figure which is set to rise.

Even the two three-cylinder, 1.0-litre petrol engines are new. I tried three models from the Up range back-to-back earlier this month starting with the entry level £7,995 Take Up.

From the front it looks great and from the back, the large black glass tailgate works best with black or white paint.

Inside the cabin is solid, rattle-free and unfussy. Steering is height adjustable, windows have manual winders and door mirrors are manually operated.

On the move the Up feels like a slimmed-down Polo, with sturdy build quality, decently weighted steering and a remarkably quiet ride for such a small car.

On faster roads, the 60 horsepower, 60mpg version’s five-speed manual gearbox needs working hard for rapid acceleration, which in turn hits fuel economy.

Safety features are very impressive, with everything from traction control, anti-lock braking, and four airbags as standard.

So let’s move on to the £9,300 mid-range Move Up model complete with BlueMotion technology, which offers the prospect of 68mpg in day-to-day driving. Inside the equipment level rises visibly with driver’s seat height adjustment, manual air conditioning, electric windows and mirror adjustment.

Adjustments to the gearbox, engine mapping and removal of some soundproofing to reduce weight means the familiar ‘thrum’ of a three-cylinder engine comes through in this model, which is absent from others in the range.

All models offer huge potential for personalisation, inside and out, but the range-topping models want for nothing in style or equipment.

So for a treat, a zoom around in the top-of-the-range £11,180 Up Black model with its prestige package of alloy wheels, gleaming black dashboard, leather and chrome-trimmed everything and a raft of technology inside.

Power in this model was the tangibly punchier 75 horsepower engine, which though more rapid from rest, is still reassuringly quiet at speed.

One of the serious options across the range is the City Emergency Braking system, which steps in to lessen, and even totally avoid, low-speed impacts.

So to finish I tried, unsuccessfully, to crash an Up into a (polystyrene) wall. At speeds of up to 18mph, the system, which uses a laser mounted behind the interior mirror, detects the risk of an impending crash and automatically slams on the brakes.

However you look at it, Volkswagen’s small car business is on the up.