Forget New York, Los Angeles, or Tokyo, if you want to watch a good battle over real estate; tell a designer of vehicle interiors you I need room for one more cupholder and watch the sparks fly.

Government demands for smaller, safer, more fuel-efficient vehicles and consumer demands for roomy, feature-laden vehicle interiors are clashing, and it's forcing engineers and designers into a new kind of real estate war. This battle isn't over square acres or square feet, it's over square inches.

Automakers learned many hard lessons in the past 15 years, and one is that Americans will buy smaller, more fuel-efficient vehicles, but only if the interiors are as comfortable and roomy as yesterday's land yachts. Innovative cab-forward designs that provide much more passenger space on relatively short wheelbases have solved the problem for now. But new government safety regulations, coupled with tougher future fuel economy and emissions rules, have designers scrambling once again to add roominess, functionality and safety to future car interiors.

How will they do it?

Tourists now marvel at how near-vertical mountain slopes in Nepal are turned into farmland by an incredibly elaborate system of terraces. Car designers had hopes that car buyers might eye their interiors with similar awe as headliners could play host to a variety of instruments and storage areas, or sun visors could double as cellular telephones. A-pillars could sprout cupholders and door panels might just become extensions of the instrument panel.

At least that's how the future looked not long ago, before the latest rounds of safety legislation and concerns about cost put the kibosh on a lot of neat ideas. You may have to forego a phone or cupholder in the A-pillar if they could cause injury to an unbelted passenger in a rollover crash. The idea of more gadgets and storage in the headliner could be little more than a designer's dream, too, for the same reason: New National Highway Traffic Safety Administration (NHTSA) proposals to extend head-impact requirements to include pillars, and other hard surfaces. The rules haven't been passed yet, but most suppliers think they will be adopted.

More buttons in the interior door panel? Safety proponents worry they could become bullets in a side-impact collision.

All this new proposed legislation makes space even mo precious as increasingly larger sections of the interior are being mandated into a padded off-limits area.

Nevertheless, suppliers and automakers have come up with some good ideas for meeting all of these conflicting demands because they're used to it. "For each problem we solve, we have another facing us immediately," Pat Furey, Chevrolet's chief designer, says cheerfully. Among the potential solutions:

* New seat designs that are comfortable and supportive but use very little space-robbing foam. Thinner cushions translate into more headroom and storage underneath the seat, and also mean less weight and easier recyclability. Very thin front seat-backs also permit more rear leg and knee room.

* New door trim designs that use strategically placed engineered plastics to absorb energy in side impacts.

* "Shrink wrapping" new car designs. A favorite term of Chevy's Mr. Furey, it means eliminating wasted space between interior and exterior surfaces. Designing thinner-looking body pillars, and using lighter interior colors also helps impart a feeling of roominess.

* More storage. Eliminating clutter makes a cabin more space efficient. "Automakers are crying for any kind of interior storage; cup holders, pencil holders, a place to hold an ice scraper, purse holders, Kleenex holders, juice-box holders, any kind of bin or holder," says Tom Russell, director of research at Automotive Industries, a major interior trim supplier.

* Built-in child safety seats. A prime benefit here is they take up far less space than conventional units.

* Active knee bolsters. They help prevent injuries in severe impacts, yet they often use up too much legroom, especially for tall drivers. One possible solution: knee bolsters that hide underneath the instrument panel, deploying only if needed.

* Plastic components with molded-in electric wiring pads that will allow buttons and switches to be packaged more flexibly and efficiently in instrument panels.

* Shifting some items normally placed in the instrument panel to the rear package tray or the trunk. This already is being done with bulky electronics items such as CD changers. Lowly package trays are likely to gain more features and functionality in the future, says Greg Jones, advance design and design for manufacturing and assembly manager at GE Plastics.

General Motors Corp.'s Ultralite concept car gives a good idea of what it all could look like someday. It's a comfortable, safe, roomy four-passenger sedan with an exterior size 18 ins. (45.7 cm) shorter and 4-ins. (10 cm) narrower than a Chevy Corsica, and gets more than 80 mpg (2.93L/100km) on the highway.

Ultralite's seats play a major role in freeing up lots of room because they are so light and thin. Developed by Gm's Inland Fisher Guide Div.,they consist of plastic fabric suspended on a lightweight frame that resembles a lawn chair, but is stronger and more supportive.

The seat-suspension material, known as "duoflx/Optiride," is made of a commercially available thermoplastic elastomer (a rubber-like. plastic) that's turned into a high-tech fabric through a proprietary process. IFG brags that although it's very lightweight, it gives a comfortable and quiet ride during normal driving, and automatically becomes firm very quickly (without electronics or external controls) during a collision or when hitting a pothole.

The Ultralite, unveiled in January 1992, uses expensive, exotic materials such as carbon fiber-reinforced composites to keep weight low. But the duoflx/optiride seat suspension system has turned out to be so efficient and low-cost that it's being incorporated into several of Gm's current seat designs.

In the real world, the plastic fabric is used only as a seat-cushion suspension system, replacing conventional spring-and-wire suspension arrangements. Even so, IFG brags that duoflx/Optiride enables seats to be designed with much thinner foam cushions, and says it can be designed to give the seat a firm "sporty" feel, a soft "plush" feel or any comfort level in between. The suspension system even can be designed in such a way that it allows the occupant to adjust the "feel" of the seat while driving simply by pressing a control button.

Other major seat suppliers such as Johnson Controls Inc. and Lear Seating Corp. also are developing lightweight, low-profile systems or technologies that make styling easier.

JCI introduced a similar "foamless" seat concept using an elastomeric fabric stretched around a frame and covered with decorative trim fabric in 1993. By removing the urethane foam and conventional suspension hardware, at least 5 lbs. (2.3 kg) per seat can be eliminated. JCI engineers say that replacing the current seat frame with lightweight alloys and composites will make it possible to chop seat weight 50% or more.

Lear brings out a low-mass, modular seat that uses aluminum and saves 16 lbs. (7.3kg). That's a 40% to 50% weight reduction from a conventional design. A new multiplex system seat eliminates some wiring and, although it's not quantified saves weight. Lear's SureBond technology makes it easier to design contours, is breathable, reversible and low cost. It uses an environmentally safe adhesive to bond trim covers to molded foam pads.

Door-trim systems are another hot development area. One of the easiest ways to improve hip room in a small vehicle is to make the door thinner and curve it away from the seat. But new side-impact standards, which began to phase in last year (100% compliance required by 1997), now require the door to provide much more protection in side impacts. That makes thinning the door nearly impossible.

Nevertheless, automakers and suppliers are developing approaches that are far less expensive and complex than side air bags. Ford Motor Co. and Miles Inc.'s Polymers Div. have developed an energy-absorbing door trim system that meets 1997 side impact requirements and doesn't rob space. It also is low-cost and 30 lbs. (13.6 kg) lighter than steel-beam designs.

Hans J. Kogelnik, vice president of Miles Polymers Automotive business group, credits the project's success to early supplier involvement in the design process.

Used on the '95 Ford Contour/Mystique and on the sliding door on the Ford Windstar minivan with quad seats, the system features energy-absorbing foam attached to both the interior door trim panel and the inner part of the door's exterior sheet metal.

The system already has won numerous design awards, including a prestigious Society of Plastics Engineers Automotive Div. Award for the most innovative use of plastics.

Other major suppliers are developing similar systems and working to refine them further. Companies such as DuPont Automotive, GE Plastics and Dow Chemical Co.'s Automotive Materials & Services Group now are trying to coordinate the engineering characteristics of different polymers to develop door-panel systems that absorb more energy in less space.

Roominess also can be enhanced by trying to "shrink wrap" a vehicle, says Chevrolet's Mr. Furey. A key area here is the vehicle headliner. If it can be made less puffy and still look good and provide enough sound deadening, significant headroom can be gained.

Although the auto-buying public may still be fascinated with cupholders, the count actually may be peaking -- at least on low-priced models, say some suppliers.

Passengers love the idea of being surrounded by cupholders, but they may not be willing to continue paying for that luxury, some theorize. The Japanese introduced the concept to U.S. car buyers. But in order to counter the cost-increasing effects of the strong yen, they rapidly are decontenting their vehicles to hold down sticker prices. Dead-pedal foot rests and other comfort and convenience items already have been axed on some models. Cupholders may soon be expendable, too.

That doesn't mean an end to cupholders altogether. That no doubt would lead to riots in the streets. Nevertheless, cost control and the increasing focus on weight reduction promises some end point to the escalation of gadgets, many suppliers say.

So, forget those terraced fields in Nepal. Now we're talking about a totally padded desert with oases of instruments and switches densely packed into areas away from designated head impact zones . . .

Will this battle for real estate ever end? Not likely. Air bag manufacturers actually are looking at special coatings fot he bag fabric that will enable them to use a slightly thinner material that they can pack a little tighter into the steering wheel hub.

It's all in day's work in the most competitive real estate market in the world.