The Lupo was introduced in October 1998, to fill a gap at the bottom of the Volkswagen model range caused by the increasing size and weight of the Polo. It was a badge engineered version of the stablemate, the 1997 SEAT Arosa. The right-hand-drive version for the UK market was launched in the spring of 1999.[6] In Japan, it was launched in July 2001.[7]

Both Lupo and Arosa use the A00 platform which is a shortened version of the Polo/Ibiza A0 platform. Initially only available in two trim variants, the budget E trim and the upgraded S trim; the range later expanded to include a Sport and GTI variant.

Petrol engines ranged from 1.0 to 1.4 (1.6 for the GTI) with diesels from 1.2 to 1.7. The differences between the E and S trim included painted door mirrors, door handles and strip, central locking, electric windows, double folding seats and opening rear windows. The Sport also got a chrome centre exhaust and front foglights as standard. [8]

Just as the Arosa, the Lupo was designed by Jozef Kabaň.