German carmaker Audi is to launch a new vehicle that looks set to take the fight right into the backyard of Mini, which is known for producing London car rental favourites such as the Mini Cooper.

The firm is working on the E1, a small-sized city runabout that not only boasts ultra-efficient green credentials, but is also being hailed as the true successor to the iconic Mini.

Set to go on sale in 2011, the new vehicle is designed to be a top city performer thanks to its small size, although performance has also been taken into consideration with its 0-60mph capability of about ten seconds.

When fully charged, the E1 will be able to cover up to 100 miles and may still appeal to luxury car hire fans due to features such as alloy rims and futuristic front and rear LED lights.

This month has so far seen the carmaker debut the new Audi Q3 sports utility vehicle, as well as the Audi Q5, which seats five, and the seven-seat Q7 model.

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