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Perhaps the most intriguing thing about the diminutive Scion iQ is that it has a back seat.

Despite the fact that it's one of the smallest cars on the road, with dimensions about the same as those of the Smart fortwo, the iQ will actually accommodate two passengers in the back. Mind you, they'll have to be tiny little hobbits, but there is a vestigial rear seat in this pint-sized little runabout, which makes it the industry's smallest four-seater, according to Toyota.

You could also make the argument that the back seat is like an automotive appendix or belly-button: Yes, it exists, but what good is it?

Aimed primarily at city dwellers, the iQ is one of five vehicles now in Scion's Canadian lineup. As well as being a four-seater, it also boasts the tightest turning radius in the industry, and is the only vehicle I'm aware of that has an airbag in the back window – to protect those back-seat passengers in a rear-ender, no doubt.

Power is delivered by a 1.3-litre four-cylinder that develops 94 horsepower and there is but one transmission choice: a CVT. Together, these two give the iQ fuel economy of 5.5 litres/100 km in town and 4.7 on the highway. These are among the best numbers in the industry, right up there with the likes of the Smart fortwo coupe, Honda CR-Z and Toyota Prius.

In fact, let's take a quick look at how the iQ stacks up against the Smart, which is probably its closest competitor.

• Access: The Smart fortwo, with those big doors, edges out the Scion. The iQ has acceptable entry/exit, but is still a bit of squeeze to get in and out of.
• Performance: The iQ is smoother to drive, with more reserve power – 94 hp versus 70 hp. It also has a much cleaner power delivery.
• Handling: The iQ has a wider road stance and 16-inch wheels and tires, with a tighter turning radius, so it wins here.
• Fuel Economy: These two are almost identical, although, according to Natural Resources Canada, the iQ has a slight edge: 5.7 litres/100 km in town versus 5.8
• Interior room: The Smart feels roomier up front, but lacks a back seat. Such as it is.
• Price: About $16,800 base before extras for the Scion, and $14,350 for the Smart, so the fortwo is more affordable. Neither can be considered a bargain.
• Styling: Both are homely, but the Scion particularly so. You can also get the fortwo as a cabriolet, which is cool.
• Safety: The iQ has 11 airbags, the fortwo has six.

Behind the wheel, the iQ is annoying. In particular, the CVT lets the side down. If you want this thing to get up and go, you have to wring its neck and really put your foot in it. During overtaking, in particular, the CVT is all sound and fury, and nothing much happens until the engine hits at least 3,500-4,000 rpm. A manual gearbox would no doubt help here.

On the other hand, the iQ nips in and out of traffic like a bandit. It seems to get a little twitchy at highway speeds, but you can easily execute a u-turn on a two-lane street, with room left over, and it'll fit into the tightest parking spot.

The Smart fortwo is a titch smaller and can, if the law allowed it, be parked head-first into the curb without sticking its back end out into traffic. The iQ, not so much. But in just about every way, the iQ is the ultimate city car. If you can't find somewhere to park a car like this in your neighbourhood, then perhaps you should rethink owning one altogether.

One small complaint: The radio is poorly designed and not at all user-friendly. Why do car companies feel compelled to fiddle around with the radio in their models? Just design a good one and leave it alone. That said, the ergonomics and switchgear in the iQ are easily understandable and sensibly located. No issues here.

But here's the problem with the iQ. According to Toyota, my test car has a price tag of more than $16,500 before taxes and extras.

Yes, it comes well equipped, with power windows, air conditioning, Bluetooth capability, ABS, a traction control system, vehicle stability and all the rest, but just for the sake of argument, you can pick up a nicely equipped Yaris hatchback for about $14,000, and it'll have a proper (or bigger anyway) back seat with fuel economy almost as good as the iQ. Ditto with, oh, the Hyundai Accent or Kia Rio.

Yes, the iQ does what it's supposed to do and features outstanding fuel economy, but it strikes me as being a titch overpriced.

globedrive@globeandmail.com

2012 Scion iQ

Type: Subcompact, two-door hatchback

Base Price: $16,760; as tested, $18,279

Engine: 1.3-litre, four-cylinder

Horsepower/torque: 94 hp/89 lb-ft

Transmission: CVT

Drive: Front-wheel

Fuel economy (litres/100 km): 5.5 city/4.7 highway; regular gas

Alternatives: Smart fortwo, Fiat 500, Chevrolet Sonic, Kia Rio, Hyundai Accent, Ford Fiesta, Mazda2