Audi has unveiled its latest concept creation at the 2008 Paris Motor Show – the tax-free Audi A1 Sportback concept.

The Audi A1 – first seen last year – is a compact hatchback which will rival BMW’s Mini when it hits production in 2010.

And the stunning new concept Audi A1 showcases the German giant’s new hybrid engine which emits just 92g/km of CO2 – making it road-tax exempt.

View images of the Audi A1 Sportback concept

The A1 concept features a turbocharged and supercharged 1.4-litre petrol engine developing 150bhp AND an electric motor with an extra 27bhp and 110lb/ft of pulling power.

This means the Audi A1 concept can accelerate from 0-62mph in just 7.9 seconds and hit a top speed of 124mph, while returning an astonishing 74mpg on the combined cycle.

And the electric motor fitted to the A1 can be used on its own – meaning ZERO emissions and fuel use.

The front-wheel-drive Audi A1 Sportback concept employs a number of fuel-saving efficiency measures, including “regenerative braking”, which transforms the heat from braking into electrical energy, and automatic stop-start, as seen on new BMWs.

Audi says the design of the new A1 concept’s “futuristic body” is emphasised by “flared arches that pay homage to the quattros of the 1980s and to today’s Audi RS6”.

View images of the Audi A1 Sportback concept

Inside the A1 concept gets a contrasting red and white interior, with four individual seats – like the pumped-up BMW X6 – and incorporates a “wrap-around” dashboard which centres around the driver.

The centre console also houses the gear selector, start/stop button and armrest with an integrated mobile phone pocket.

Audi are testing out a number of concept A1s at the moment, ahead of the car’s expected launch in 2010.