BMW has confirmed it will reveal a small open-top sports car concept at the Geneva motor show next month, but will it drive the front or rear wheels?

BMW has confirmed it will show a small roadster concept car at the Geneva motor show next month, a move that is sure to spark a new wave of speculation about a smaller, less expensive version of the Z4.

A Z2 has been rumoured for some time and would allow the company to compete with a mooted small roadster developed by the Volkswagen group that could wear VW and Porsche badges, with the latter model sitting beneath the Boxster.

At the recent launch of the BMW 6-Series Convertible, a spokeswoman confirmed the roadster show car would be the company's star attraction at March's Geneva show but refused to go into any detail.

BMW insiders are saying the show car will not go into production, but that some design features will be incorporated into future models.

The car is believed to have some wild styling themes, including overlapping exterior panels, a large scoop on one side of the bonnet, rear power bulges (reminiscent of a Porsche Carrera) and exterior lighting highlights that can change colour. It is also expected to feature retractable doors – used on BMW's 1980s Z1 roadster – that drop down into the sills.

There are also styling cues from BMW's Vision Efficient Dynamics hybrid show car, while the technology on board will include car-to-car communication, real-time navigation and the latest sensor technology for accident avoidance.

Despite the denials that the concept car is a forerunner to a new Z2, European car magazines are speculating a small BMW roadster is definitely in the pipeline, although reports are mixed about what form the car will take.

Germany's Autobild suggests the car is likely to be powered by a new 2.0-litre turbocharged four-cylinder engine and will sit on the rear-drive platform of the next-generation 1-Series expected later this year.

But Car magazine in the UK claims the car will fall within BMW's new i-Project umbrella, a new sub-brand for the German marque that focuses on front-wheel-drive small cars employing the company's efficient dynamics fuel-saving technology. Engines would likely to be smaller 1.6-litre fours and possibly a three-cylinder, with the car aimed at cheaper roadsters including Mazda's MX-5.

BMW is scheduled to reveal details of its new environmentally-conscious sub-brand in the last week of this month and insiders claim the roadster concept has styling pointers to the new small cars.

Car Magazine in the UK says the new roadster isn't due until 2015, but other reports out of Germany say it could launch in the second half of next year and be followed by a coupe variant. A Geneva reveal would suggest the car will enter production sooner rather than later, despite BMW's denials about the concept entering production.

While the Z4 has a folding hardtop roof, its younger sibling is expected to feature a soft top for weight and cost reasons.

BMW says it is not wedded to hardtops, despite making a fuss about the folding metal roof on the 3-Series convertible and the Z4.

The company's head of functional integration, Gerard Schick, says the company decides the roof design for each car based on customer feedback.

"We always look at the type of car and the history of the model before we decide which roof to do," he says.