You could argue, with justification, that Audi's new A2 is the car Mercedes set out to create when it conceived the A-Class.

Spool back to the Vision A at the '93 Frankfurt auto show. The Mercedes concept car's frame is aluminum and, because it weighs just 1,574 lbs. (714 kg), there's talk of 91 mpg (2.6L/100km) at 56 mph (90 km/h). But already management is back-tracking. They admit the production car will be made of steel, weigh more than 2,200 lbs. (1,000 kg), and has no hope of reaching the soon-to-be universal, German baby car target of 3L/100km, or 78 mpg. Says Mercedes boss Juergen Hubbert, "Aluminium is fine for low-volume, high-profit cars, but not for base models."

Juergen, meet Audi's A2.

Audi's revolutionary baby car uses an aluminum space-frame and panels.

It's a significant 9.8 ins. (251 mm) longer than the A-Class, though it is also 1.9 ins. (47 mm) narrower, yet the 1.4L TDI version weighs just 1,819 lbs. (825 kg), a massive 573 lbs. (260 kg) less than the diesel A-Class. And it returns a staggering 2.99L/100km, or 79 mpg, not at a consistent cruising speed, but through the far more realistic combined cycle. It's true, the production volumes of around 60,000 a year are only a third of the A-Class. On the other hand, Audi is expected to price the A2 slightly below its closest rival, if only because it already has the A3. Having two small cars, no matter how different, is one problem Mercedes didn't have to face when it launched the A-Class.

"Our most important marketing task is to position the A2 separately from the A3," says Dietmar Schumacher, marketing boss for the new model. "Our car is more avant-garde, more innovative. It's above the mainstream products and has nothing to do with the A3 or the Golf. We see it as responsible, progressive and sophisticated and believe a conquest rate of 75% to 80% is possible.

"The class was created by the A-Class. We are doing what they wanted to do. Mercedes helped us."

The year Mercedes first revealed the Vision A was also the year when Ferdinand Piech first began to talk about the 3L car as a feasible production model, and not just a fantasy concept. Few engineers believed such a car was possible, certainly not by the 1999 deadline imposed by Mr. Piech. Audi was just about to launch the A8, the world's first aluminum space-frame (ASF) production car.

Mr. Piech, who'd bulldozed the A8 through the manufacturing process against the wishes of many of his colleagues, came to believe that by applying the same principles at the other extreme of Audi's product line, they could create a lightweight, higher volume, small car capable of 3L consumption. Learning from the A8, a second generation ASF, might provide the necessary technological breakthrough.

The 1996 brief, begun as a development project, called for a small, lightweight car potentially capable of 3L consumption. Derek Jenkins, a 29-year old American designer, who first worked on the New Beetle, spent the next four years in Ingolstadt, where he created the A2's exterior styling with Luc Donckerwolke, under then Audi design supremo J. Mays, now in the same role at Ford.

"The first phase were barnstorming sessions when we looked at the volumes and concepts," says Mr. Jenkins, "Then came the packaging parameters. We knew we couldn't compromise on the package of four doors and four seats. Mercedes' Vision A gave us ammunition to fight for the package. We wanted the car to be as short as possible, with tiny overhangs that nobody believed were possible for crash safety. As designers, we also pushed for a one-and-a-half box design. We wanted to stay narrow to help the aero and traded off width for height."

By November 1996, when they started the first sketches, the designers knew their work would be both a production car and at least a couple of concept vehicles.

The weight target was a mere 1,650 lbs. (750 kg), 30% less than the A3 and 15% below the smaller VW Polo. The drag coefficient had to be no more than 0.25.

"We had no preconceived ideas of what they should be," says Mr. Jenkins. "We were rethinking Audi's identity, taking the Audi cues and evolving them. Cars are a formula, each company varies the formula. We wanted to create an efficiency bias for the W10 (the internal codename for the production A2).

"The challenge is to get the compromise right. For the A2, the package, aerodynamics, design, weight and construction were equal, with weight and aero winning. Design had to find a surface solution that still looked like an Audi."

Audi discovered what so many carmakers are learning when they want the slipperiest possible shape for their small cars: The wind tunnel dictates a strong taper toward the rear.

"Seventy-five percent of the profile came from the wind tunnel", admits Mr. Jenkins.

"In both plane and vertical view there is a strong taper to the rear. We wanted a brutal, high front end, a kind of bullet nose for visual streamlining. We fought not to do an on-the-ground nose because we wanted to design a premium small car that has dignity and strength with good aerodynamics. The challenge was greater for design, for it's not a naturally dynamic shape.

"The centerline of the roof is an accelerating curve to the spoiler (halfway down the rear hatch). Having the smallest window of separation of wind at the rear was a basic parameter. The designers wanted the rear end to be rounder, the aerodynamicists insisted the corners needed sharp lines, and we were constrained by vision angles. It took a lot of fine tuning."

A narrower track made it difficult for the designers to give the A2 a traditional Audi stance with prominent wheel arches. They came up with the idea of recessing the arches slightly inboard of the body sides.

Mr. Jenkins' Ingolstadt proposal won over Stefan Sielaff's design created in Volkswagen's European Design Center in Spain - on the same package. Mr. Sielaff, now Audi's interior design czar, generously says, "I understand the decision. Today, it looks better."

Mr. Sielaff explains one of the great ironies of the A2. "Because the car was to be made from aluminum panels on an aluminum space frame it was important for us to take account of the manufacturing techniques, but it was even more important to consider the tradeoff between glass and aluminum. The more aluminum and less glass, the lighter the car becomes physically, but not visually. If you are not careful it tends to look like a tank, so we decided to add enlightening features."

The need for as much glass as possible led to the idea of a glass roof. Twin sunroofs are an option, and so heavy that nobody at Audi is prepared to say how much the complex system adds to the car's weight.

Says Mr. Jenkins, "In an animated way, the A2's design became two parts body, one part glass. First impressions are of a chunky, massive design, and the car represents that. We experimented with a lower belt line and played with the C-pillar to make the car balanced. In the end, it's the fenders, the lights and the volumes that mean it could only be an Audi."

The sloping roofline, so necessary for a low drag, put pressure on the interior package. But very cleverly Audi has recessed the rear footwells and thus avoided the low cushion of the A-class, which is constrained by its very high floor. The rear seat is deliberately shaped to accommodate two adults, though Audi is working on a bench design for three people.

Given the advanced technology and the radical exterior styling, the A2's interior is surprisingly conventional. A number of different proposals were tried, not difficult since the same people who were working on the W10 also were creating the three Al2 concept cars for the 1997 Frankfurt and Tokyo show, each with a different interior. Only two of the concepts were ever shown to the public. It was the small SUV version that missed out because it seemed like a contradiction in philosophy to create so economical a vehicle for off-road motoring.

"We had started on the interior, but it was rejected at the end of '97. We then decided to take the Tokyo show concept to production," Mr. Sielaff says. We wanted to use existing bits to meet cost and time arguments. We also wanted our customers to feel at home. The instruments on the show car came from the Beetle. But we thought a one-eye instrument was synonymous with a cheap baby car, and it didn't give room for a trip computer, so we adopted the instruments from the A3 and TT."

"We didn't want to make a fashion statement with the interior. In five years' time it will still be great, something our customers can be proud of. It's a grown up interior and not a toy."

The maturity also means it's built of the same materials, and to the same quality level, as other Audis.

Mechanically, the A2 borrows its basic suspension design from the next generation Polo platform, first seen on the Skoda Fabia, with MacPherson front struts and a torsion beam rear axle. The engines, too, come from existing VW models. To be fair to the A-Class Mercedes, both the 1.4L gasoline and turbo-diesel models weigh more than the 1.2L super economy model, which Audi admits won't be made in right hand drive and is expected to take just 5% of total sales. Even so, the A2 1.4's 1,970 lbs. (895 kg) is still 276 lbs. (125 kg) lighter than the A140. Are you listening Mr. Hubbert?