FIAT has unveiled a new city car and its contender in the burgeoning market for compact MPV models.

To be launched in major European markets in autumn, both cars will be available in right-hand drive form early next year and are expected to achieve a significant increase in business.

First out will be the Idea, a 'tall' model with five seats and a roomy interior despite being shorter than the new Focus C-MAX. Featuring front seats that fold forward to form tables and a sliding rear seat, it has a flexible luggage compartment.

Six airbags, ABS, electronic brake distribution and brake assist will be fitted as standard and the new 1.3-litre Multijet – claimed to be the smallest, most advanced second generation common rail diesel engine on offer – will be available from launch. The 16-valve unit from Fiat-GM Powertrain produces 70bhp at 4,000rpm with emissions said to be well inside the Euro IV limit.

The other new launch is the Gingo, which will take over from the Panda, the utility supermini that will have passed the five millionth milestone when production ends in September.

Bigger and more stylish than its long-running predecessor, the five-door Idea seats five in one of the most spacious passenger areas in the class but still has more than 200 litres of luggage space. Like the Idea, this model will also come with Multijet power as well as Fiat's familiar 55bhp and 60bhp petrol engines paired with either five-speed manual transmission operated from a dash-mounted gear lever or a new Dualogic unit with sequential and automatic modes.