Interesting editorial from this weeks Autocar magazine about a new MINI-Minor (26/5/10):

Why MINI needs to expand - up and down
"The economics of the car business are harsh. So harsh that a successful company like MINI still struggles to make a profit.
The answer according to MINI’s paymasters in Munich, is to turn the British icon into a ‘brand’. For which you can read that BMW is planning a huge expansion of the range.
This week we’ve driven the first fruits of that plan: the MINI Countryman. Traditionalists will hate this supersized Mini. The rest of us, though can appreciate a genuinely new, talented and fresh looking rival to the Golf, as well as crossovers such as the Nissan Qashqai.
That’s not all, either: this week we’ve uncovered MINI’s secret plan to return to its roots with a baby car. Known internally as the MINI Minor, a nod to the company’s Morris roots, the all-new car is due to hit the streets in 2014 and is likely to be exactly the same length as the Alec Issigonis original.
If MINI does make a Minor, that’s another brand extension we’ll be awaiting with great anticipation.”

Chas Hallett - Editor

More about the 'MINI-Minor' now on the Autocar website here:
Mini starts city car project - Autocar.co.uk (http://www.autocar.co.uk/News/NewsArticle/AllCars/249986/)

Mini starts city car project
"Mini has kicked off studies into an affordable city car as part of a programme aimed at boosting sales by adding new models at the lower end of its line-up.

Described as a Smart Fortwo rival, the new model is aimed at complementing parent company BMW’s Megacity project. It will use conventional technology and modular mechanical components employed across the German car maker’s line-up to keep development costs down and hit profit targets.

Mini has long argued that cars smaller than its popular three-door lacked the profitability to be sustainable in the longer term. “The question we’ve asked ourselves all along is: how do we make money at this level?” a source within the firm told us.

But with BMW now committed to a three-cylinder engine and its officials investing heavily in new production techniques, Mini appears confident it can now build a solid business case for an ultra-frugal city car.

“Nothing is decided just yet,” said our source. “It is all at an early stage of conception. But there is a lot of momentum behind it right now. We may be ready to show a concept within the next 12 months or perhaps a little longer.”

Mini is tight-lipped about whether its city car will be a two or four-seater, and whether the engine will be at the front or rear.

Autocar has been told that Mini officials are keen to ensure it stretches to no longer than 3050mm — the length of the original Issigonis-engineered Mini. That would make it a good 700mm shorter than the modern-day version but some 300mm longer than today’s Smart.

Proposals for the new Mini are being developed primarily in Munich, although BMW’s design thinktank DesignWorks in Los Angeles is also contributing ideas to the project, which one official referred to by the name ‘Minor’.

Mini’s renewed interest in city cars follows Smart’s recent announcement that it plans to develop the next Fortwo with Renault, which is expected to sell its own styled version from 2014.

The last Mini city car concept to be made public was the Spiritual in 1997, three years after BMW’s takeover of the Rover Group. Shown in three and five-door form, it had an 800cc, rear-mounted three-cylinder engine."

See the Mini Spiritual concept pics:
Mini - Picture Gallery - Autocar.co.uk (http://www.autocar.co.uk/car-news/mini-/mini-starts-city-car-project/249986/pictures/mini-starts-city-car-project.aspx)