The 2012 Volkswagen Chico is a subcompact that is due out in Europe in 2011 and may be bound for the US market for 2012. VW is looking to enter the micro market and compete against vehicles such as the Smart and Toyota iQ.

If the new vehicle goes ahead, the Chico will be based on the New Small Family platform from VW. However, according to the VW chairman, Martin Winterkorn, it will be shorter and narrower than the other vehicles that share this platform. Although VW did want to set the vehicle up with at least one rear seat, engineers at the auto giant could not solve the packaging issues associated with this arrangement. Therefore, the Chico will be a two-seater hatchback only.

The 2012 Chico will follow the same engine setup as the Toyota iQ. It will have a front engine package and will be front wheel drive. The U.S. model will probably come with a 1.4L four-cylinder engine with direct injection. It is expected that this engine will have a deactivation system that allows two cylinders to become inactive in light-load driving conditions. It is also rumored that VW is working on a 1.2L three-cylinder turbocharged engine. The European version will probably also have a diesel turbocharged engine; however, this version is not expected to make it to the U.S. The engines will probably be coupled with six-speed manual transmissions or VW’s new auto-manual seven-speed transmission.

The rear suspension will be a twist-beam configuration with rear drum brakes. The Chico will likely come standard with ABS, front side airbags, and traction control. The new VW may also get engine stop/start functionality and regenerative braking to complete against other mild hybrids.

The two-door VW Chico will probably be joined by an Audi “sister” version. Audi will likely change the base steel structure to an aluminum spaceframe which is the favored underbody of the upscale brand. The Audi version may also get aluminum or even plastic body panels to improve the fuel economy of the derivative.

The 2012 Volkswagen Chico is not the only microcar that will be making its way to the U.S. automotive market. Other manufacturers, such as Honda, Hyundai, and Ford are expected to bring their offerings to the U.S. as well in the next few years.