Small seems to be the big new trend among automakers, and Mazda is trying to decide if it wants a piece of the potentially huge tiny-car pie.

The Mazda1 would slot beneath the company's B-segment Mazda2, says Mazda's GM of global sales and marketing, Yasuhiro Aoyama, and could might be ready for sale toward the end of this decade.

Aoyama was interviewed by GoAuto at this week's Australian International Motor Show in Sydney.

Rumors indicate Mazda could go one of two ways with the little car. It could either shoot for low cost and compete with cars like the Tata Nano or Mazda could instead take on Volkswagen's Up at a higher price point. Aoyama admits the company will eventually have to address the city car market to meet new European emissions regulations.

A Nano competitor would give Mazda a low-cost presence in the ever-growing southeast Asia market.

Either plan would be easier to implement with a partner or government incentives, and Mazda has several options there. Mazda1 production costs could be lowered by building the car in a country with lower labor rates – Indonesia perhaps. Or Mazda could leverage its long-running relationship with Ford or its newly-formed partnership with FIAT to co-develop a sub-B-class competitor.

With sales of the Mazda2 not exactly huge, chances for a Mazda1 on sale here are, well, tiny.

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