We often bring you interesting motorcycle-related news because motorcycles, with their (usually) smaller-sized engines, often get much better fuel mileage than cars. Yamaha is no stranger to making great motorcycle engines, and they even have a history of developing and producing engines for cars. See the Taurus SHO for proof of that as well as the current V8-powered Volvo models. We hear that Toyota and Yamaha have teamed up to develop a two cylinder 1000cc engine for Toyota's planned microcar, the iQ. A concept version of the car was recently shown which features an odd 3+1 seating arrangement.

Volkswagen also has plans to produce a microcar called the Up! In VW's design, the engine is mounted at the rear of the car, while Toyota is expected to mount the motorcycle-derived engine at the front. Motorcycles usually employ "unit" construction, meaning that the engine block and transmission cases are cast as a single piece. This design can reduce the size of the drivetrain, making perfect sense for a microcar.

[Source: Automotive News (sub. required)]