DETROIT — The niche for ultra-small city cars may be limited, but Toyota’s funky Scion brand believes its new iQ will expand the segment, and it may have reason for optimism.

Positioned between Mercedes-Benz’s Smart car and the Fiat 500, Scion iQ offers a 1.3-liter four-cylinder engine capable of 94 horsepower. But the real draw may be the 11 airbags and a nimble 12.9-foot turning radius that will make parking in congested cities easy.

The U.S. Environmental Protection Agency says it will average 37 mpg in combined city and highway driving.

Jack Hollis, Scion vice president, calls the segment premium micro-subcompact. How many cars are sold will depend on gas prices, which are now down from their peak of last spring. But despite economic head winds, young consumers are migrating to urban hubs, and that’s the market the iQ is targeting.

“The youth of today are much more interested in mass transit, car-sharing and other transportation options,” Hollis said.

The iQ’s designers carved out more interior space, especially for front-seat legroom and overall headroom, than a glance from outside the car would lead one to expect.

The iQ was slated for launch this summer, but the disruptions caused by the March 11 earthquake and tsunami in Japan pushed back its production launch. Now Hollis expects West Coast dealers to see their first cars in early December.