The rapid rise of a new breed of car so small that it lacks even a proper glove compartment is confounding the gloom in the rest of the market and challenging the motor industry's mantra that bigger is always better. Motorists are downsizing in record numbers, choosing cars that are not only cheaper to buy but much cheaper to run.

While overall sales of new cars fell by 30.5 per cent last month, sales of city cars — also known as minis — almost doubled, rising by 84 per cent on March 2008. On current trends, sales will rise from 28,000 last year to more than 50,000 this year.

The cars have engines no bigger than 1000cc, only two doors and are typically less than 3m (10ft) long. Passengers may have to squeeze into the rear seat but drivers will be able to squeeze into many more parking spaces.

There is no longer a stark trade-off with small vehicles between safety and comfort on the one hand and economy on the other. The Toyota IQ, one of the most popular new city cars, is 6cm (2in) shorter than the original Mini and has an “optional canvas bag” in place of a glove compartment. Yet even the basic model has advanced braking system, stability control, air conditioning, electric windows and nine airbags. Its fuel efficiency of 60 miles per gallon is better than that of a Toyota Prius hybrid and, at £9,500, it is only half the price.

The Toyota IQ even got a positive review last month from Jeremy Clarkson, who wrote: “These cars are the future. Small. Cheap to run. Good-looking. And surprisingly well kitted out with toys. They really do make Mondeos and Volvos and so on look awfully wasteful and unnecessary.”

Even the cheapest, most basic city cars, such as the Hyundai i10, which costs £6,500, still achieve four stars in crash tests.

However, the trend towards city cars will only worsen the plight of the British vehicle manufacturing industry, because all are made abroad.

Jay Nagley, publisher of Clean Green Cars, said that manufacturers barely covered their costs on city cars.

Several manufacturers have teamed up to produce such cars in the same factories. The Ford Ka and the Fiat 500 are made in a factory in Poland, appropriately in a town called Tychy.

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