Volkswagen will develop compact hybrid versions of the Polo and Golf ranges after all.

It will also develop a replacement for the ground-breaking three-litre Lupo that failed to attract customers in its first evolution.

Leading consumer car magazine, Auto Motor und Sport, reported that the new models are a response to recent discussions about CO2 emissions.

According to a German press agency, a Volkswagen spokesperson has confirmed the report, although the spokesperson did say that Volkswagen will not develop an ‘eco-model’ and that only models that ‘make marketing sense’ would be considered.

Volkswagen Group CEO, Martin Winterkorn, has said in the past that an economical small car is under development, but he has not given any details of how it would be powered.

Volkswagen Group’s approach to hybrids is not so clear, A hybrid Touareg is planned, but hybrid versions of smaller cars do not tend to generate more fuel or CO2 savings than a high performance diesel engine – unless the models planned are diesel hybrids. The German press agency said that Winterkorn has said in the past that a small Volkswagen hybrid should be launched on the market as soon as possible.