Over the last year we’ve heard rumors of BMW working on a small city car to be positioned below the current MINI. With European law-makers looking more likely to demand lower and lower corporate CO2 standards, BMW needs a solution to it’s relatively high company average. While the thought of building a baby FWD BMW makes sense on paper, it doesn’t really translate well to the BMW brand. But what does seemingly work is a smaller, more efficient MINI.

Here’s what we’ve heard from sources. BMW is currently working on a ultra efficient FWD car smaller than the current MINI that will slot below the current MINI One price by a 2000 to 3000 English Pounds. That means we could see a “ultra” MINI priced as low as 8500 Pounds. The timeframe will have to roughly correspond with what EU law-makers are proposing, but 2011 or 2012 seem like likely targets for the project.

Again we must stress that this is early days in the project and anything and everything could change. But rest assured, no matter what happens you’ll hear about it on MotoringFile.