The Volkswagen Up! Has been declared the 2012 World Car of the Year at the New York Auto Show on April 5.
This is the third time that a car belonging to the automotive maker has been given this title. In 2010, the Polo was awarded with the accolade, and the Golf VI won the title in 2009.
The Up! Was selected for its efficient use of space, safety, motoring fun and environmental compatibility, said the Chairman of the Board of Management of Volkswagen AG, Prof Martin Winterkorn.
World Car jurors observed that that the little car "has altered what we come to expect from the city car segment".
They noted its responsive steering, sophisticated suspension setup, new efficient engines and the quality of materials and finish.
"Never before in this economy segment have owners felt so premium", said World Car Awards jurors.
The Up! was chosen from an initial entry list of 34 new vehicles from all over the world, which was then shortlisted to 10 cars.
The two other cars that made it to the finals were the BMW 3 Series and the Porsche 911.
The Porsche 911 was also named as this year's World Performance Car, beating the Lamborghini Aventador LP 700-4 and the McLaren MP4-12C to gain top spot in this category.
Previous World Car of the Year winners were the Nissan Leaf in 2011, the Mazda2 or Mazda Demio in 2008, the Lexus LS460 in 2007, the BMW 3-Series in 2006, and the Audi A6 in 2005.