Mitsubishi has confirmed that it is working on a new rear-wheel-drive, entry-level model for sale in world markets, including Europe.President Osamu Masuko said the new car, due by the end of 2010 and expected to challenge the Smart ForTwo and Toyota iQ, will conform to Japan’s strict Kei jidosha (K-car) regulations. That means it will be no longer than 3400mm and no wider than 1480mm. The new microcar, which is expected to follow the example laid down by the larger Mitsubishi i by using a rear-mounted engine, will get a 63bhp, 660cc, three-cylinder petrol engine for the domestic Japanese market. K-car regulations stipulate engines no larger than 660cc and no more powerful than 64bhp.However, export versions are likely to receive the same 1000cc, three-cylinder unit that Mitsubishi supplies to Smart for the ForTwo in 61bhp, 74bhp, 84bhp and 98bhp formats. There’s no word yet on a diesel option, but the car could yet use the ForTwo’s 45bhp, 800cc, three-cylinder oil-burner.