While the City's layout was traditional for its category, with front-wheel drive and a transversely mounted engine, the innovative tall seating arrangement created comparable legroom to a car many times its size. This, combined with class leading fuel economy led to it being a considerable success in the Japanese domestic market. The engine was the 1231 cc four-cylinder "ER", designed specifically for the City. It was also available together with the Motocompo, a special 50cc 'foldaway' scooter constructed to fit in the City's small luggage area, itself designed around the Motocompo. Originally a sportier R version, the economical E and two commercial van versions ("Pro") were introduced. In September 1982 a turbocharged version of the Honda ER engine was added to the lineup.
Designed by Pininfarina and introduced in August 1984, a drop-top Cabriolet utilized the wider track, fenders, and bigger bumpers of the Turbo II "Bulldog", but was only normally available with the naturally aspirated 67 PS (49 kW) engine. The Cabriolet was well equipped, with a glass rear window and twelve pastel colors not available on the hatchback versions.
A March 1985 light facelift brought a new asymmetrical grille (although not for the Cabriolet) and some interior improvements. The E and E II models were replaced by the new E III, while a lower priced U model joined the lineup. Naturally aspirated engines in the AA Citys also gained a new fiber-reinforced aluminum alloy connecting rods ("FRM"), a world first in series production. One month later, the R became available with the interesting Hypershift transmission, a 4-speed with an electronically controlled overdrive on 2nd, 3rd and 4th gear - in essence creating a 7-speed gearbox.
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