From the name alone you just knew this would be a cool car, right? I knew it, and I had the same reaction. "Wait, so Lada had a microcar concept that they named Gnome. This'll be good."
Moreover, Gnome is a perfect name. Car companies have been getting shit on lately because of the alphanumeric garbage most models use these days. Somewhat ironically, Russian and, later, Soviet carmakers started by only using model codes—this is the Iron Curtain we're talking about—and truth be told, the Gnome was called VAZ-1151 inside the company.
The first vehicle released as part of their "Dwarf" small car project—to be followed up, a year later, by the beachgoing, electric Elf—all prototypes made in this theme were based on the Oka hatchback.
Known as the VAZ-1111 internally and nicknamed Oka after the Oka River that runs past the town where the small city car is assembled, it replaced the ZAZ Zaporozhets, a car so universally despised it's best to not talk about it. Powered by a "chopped in half" 4-cylinder engine from the Lada Samara, the 2-cylinder 750cc motor could push the lightweight car to 125 km/h (78 mph).
Fast enough, if you ask me. Especially since it's a Russian knockoff of the Daihatsu Cuore—and was changed little between its introduction in 1988 and cancellation in 2008.
Mechanically, the Gnome would have been similar. But shorter. Skinned with lightweight metal and plastic panels, it was nearly a meter shorter than the Oka at just 2.5 m (8.2 ft) long, the same as a smart fortwo.
Even though it's front-engined, it would have matched up quite well with both the fortwo and later Toyota iQ and Scion iQ, had it advanced past the prototype stage. I wouldn't want to crash while in one: at just 500 kg (1102 lbs) and with a top speed of 140 km/h (87 mph), I doubt it'd keep its four occupants (two adults and two children) as safe as its more modern classmates.
That said, it's remarkable that a small Russian factory—before the fall of the Soviet Union—was able to successfully set the template that German and Japanese engineers would copy, at least in part, on the road to produce their city cars. In 1992, the Gnome was shown at a Moscow car show and in 1996(!) the electric "Elf" version was sent to the Turin Motor Show for exhibition.