Volkswagen is set to revive its rear-engine design that was made popular with the original Beetle by releasing a new small car featuring a water-cooled mill residing over the rear axle. The plans were disclosed to Automobile Magazine by an internal source, who also revealed that the new car will be offered with three different wheelbase sizes and two distinct body styles. One version will measure around 130in and is likely to feature retro cues mimicking the Beetle, making it a perfect rival to the upcoming Fiat 500.

To keep costs low, the new cars could miss out on some basics but will get other items like ABS, sat-nav and a sunroof as options. The new range will be marketed as a global platform with emerging markets getting an ultra-efficient two-cylinder engine or possibly a one-cylinder unit. Western markets are expected to receive a turbocharged three-cylinder version with direct injection.

According to the source, the new car is the brainchild of Ferdinand Piëch, whose grandfather, Ferdinand Porsche, was the man responsible for the original Beetle. VW’s new boss Martin Winterkorn is reported to be backing the idea, but safety issues are still a major hindrance to it ever eventuating. One VW exec who spoke with Automobile Magazine mentioned that developers were forced to "install stability control systems to address handling issues."