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You’re heading across town in a big, silver car. It’s late. The traffic is light, and it’s moving through the city smoothly and quickly. The roadway dips as you enter a tunnel. Momentarily something catches your attention: up ahead the tunnel roof is illuminated by one half of a square marked out in fluorescent blue light. You have just enough time to wonder ‘what the hell was that?’ before it’s gone, you’re out of the tunnel and back in the hubbub of city streets again.

As art experiences go, Nikolaus Koliusis’ light installation 50km/h is pretty elusive; much like the city itself. It’s not that Stuttgart has an image problem, exactly; it’s just that it doesn’t have much of an image at all. To the rest of the world this wunderkind of the German post-war miracle is simply Benztown – a metropolis born under the sign of the three-pointed Mercedes star that looks down from the tower over the railway station. It may be unfair – there’s way more to the place than cars – but it’s hardly inaccurate. This is Europe’s Motor City, after all; the headquarters of DaimlerChrysler, of Porsche and Bosch. It’s the heart of Germany’s fourth biggest metropolitan area, with more high tech industry than just about anywhere else in Europe. But it’s possibly the only major European metropolis that’s also a major wine region. You can buy a Mercedes coupé built in the Untertürkheim plant pretty much anywhere in the world, but if you want a bottle of the light, fruity Trollinger red wine grown on the hills overlooking the factory, you’ll have to come to Stuttgart to buy it. Very little escapes the city limits.

Like many European cities, Stuttgart has its vast 1960s and 70s apartment blocks in outlying satellite settlements. But if you bought a tageskarte for the excellent U-bahn system and roamed the city looking for an urban dystopia, you wouldn’t find it. Those massive, Corbusier-like slab blocks rising out of the forest are middle class housing, highly prized for their peaceful, almost rural location.

It is, like Budapest, a major spa. It’s a hilly city, where the more desirable homes cling to the hillsides, the view often the most desirable thing about them. Where the hills become too steep, the city streets trail off into stairways, or Stäffele as they’re known. There are more than 300. And like some sunny, central European LA, Stuttgart sits thinly on the landscape, a broken patchwork of apartment blocks and plush villas divided by deep, canyon-like valleys and thickly wooded hills. It’s a city where fifty years of the US military presence has had its effect. Because it’s the home of German hip-hop.

It also has as strong a claim as anywhere to be the place they prototyped the twentieth century. If Hollywood taught us what to dream about and what to wish for, it was Stuttgart that showed us where we’d live and how we’d get there. It was here, a century ago, that Gottlieb Daimler and Karl Maybach developed the modern automobile, and Bosch invented the spark plug and the magneto.

It was never really just about the cars. In the roaring 1920s, Stuttgart showed the world what the cities of the 1950s, 60s and 70s would look like. The business district is full of squared-off, concrete or travertine tributes to the daring of the Weimar Republic’s architects. Up on a sunny hillside overlooking the city, Le Corbusier, Mies van der Rohe and a host of other visionaries built the Weissenhofsiedlung, a model housing scheme whose stark white houses became icons of modernity and remain so to this day. The renowned German Jewish architect Eric Mendelsohn found the city stuffy, but he nevertheless built the greatest of his Schocken department stores here in 1928. If pioneering modernism is your thing, you can still see an awful lot of it in Stuttgart. But you won’t see Mendelsohn’s store. They tore it down in 1960 to widen the road.

Perhaps they had all this classic modernism in mind when, in the last years of the twentieth century, the city government decided to build a new home for the municipal art collection. Stuttgart is a wealthy city, and it owns an important collection of classic modernist art, including the world’s biggest collection of works by Otto Dix, the chronicler of Weimar Republic decadence and reaction. There are some real trophies in the collection: the Groβstadt triptych that was the inspiration for the opening and closing scenes of Cabaret, or the unforgettable portrait of the dancer Anita Berber, an iconic vamp in a red dress, are just two of the best known. They’re the perfect artistic accompaniment to all that daring 1920s concrete.

But they had nowhere to show these treasures properly. For decades the collection was forced to share a building with another arts organisation, the Württembergische Kunstverein, and it was impossible for the works to be seen to full advantage. By the end of the 20th century, the city had decided to do something. An architectural competition was organised. The task wasn’t just to build a new home for the artworks but to give an important part of the city a shot in the arm. Stuttgart was one of many German cities that had to be extensively rebuilt after wartime damage. Not everything about the rebuild was successful, and by the late twentieth century it was time to put right the flaws.

Stuttgart had been here before. There was a brief period, back in the eighties, when the British architect James Stirling’s post-modern design for the Neue Staatsgalerie drew worldwide attention from the sort of people to whom architecture matters and, briefly, Stuttgart was the name on everyone’s lips. Stirling’s dazzling blend of classicism and modernity was arguably to blame for all the ‘look at me’ art galleries built since, culminating in Frank Gehry’s Bilbao Guggenheim; buildings where the architecture risks upstaging the exhibits. But soon the new-found fame was over; the Staatsgalerie faded from the international headlines, and for Stuttgart it was back to cars again. Daimler-Benz merged with Chrysler and a giant was born.

Fast forward to the spring of 2005, and a little of the shine has faded from the DaimlerChrysler paintwork. With the small car division racking up losses, the Smart car no longer looks like such a smart idea. There were even redundancies, a shocking matter in this most self-confident of cities.

Perhaps it was as a reflection of more sober times that the new Kunstmuseum Stuttgart was designed, quite intentionally, to be no attention-grabber in the Bilbao mould. In the built reality, it’s almost self-effacing. It stands at the midpoint of Germany’s longest shopping boulevard, the Königstrasse, and though the elegant glass cube by Berlin-based architects Hascher and Jehle is an exquisite object, it might as easily be a chic department store as a major new gallery of modern art. A vast, fluffy artwork inside by Stuttgart-born artist Simone Westerwinter gently parodies the situation: its title is 84 square metres of great location. It’s true: Kaufhof, C&A or Karstadt would probably kill for this site.

Inside, though, it’s all much more interesting. The lobby is wide, open and welcoming; the first thing that greets you is not some frowning official, but a sleek espresso bar. The public areas of the building stay open after the galleries shut, so that you can wander in for a latte or climb the steel stairs to the Cube restaurant on the building’s highest level. It’s worth it: the high level views over Stuttgart’s grandest square, the Schlossplatz, are pretty much unattainable anywhere else. Inside that sleek glass skin, the inner walls of the building are lined with rough, warm stone, so that at night the illuminated structure looks entirely different.

There’s 5000 square metres of exhibition space in the Kunstmuseum, but it’s plainly not all visible from the street. Most of it is buried underground, in the gently curving course of a redundant road tunnel that has been immaculately reworked to house it. And that’s where Nikolaus Koliusis’ light installation comes in. Only six centimetres of steel separate the artworks in the calm, clean exhibition space from the 30,000 cars a day that pass the symbolic blue light in the tunnels to either side.

The deeper into the museum you go, the more conscious you are of the gentle upward slope of the floor and the subtle geometry of the former roadway. But there’s nothing dank or dismal about it; the lighting manages to combine subtlety with brightness in a way that eluded the designers of London’s Tate Modern. It helps that a line of glass skylights set into the public square above the gallery follows the old road tunnel back, allowing natural light to penetrate. In Stuttgart, you don’t have to peer at the exhibits through a seedy grey twilight.

The citizens of Stuttgart queued in the snow when the museum opened in March. It was always intended to be a welcoming museum, and that part of the design brief has certainly worked. On a Tuesday morning before Easter, it hums with enthusiasm, not just for Otto Dix but also for Wolfgang Laib’s beeswax room, Georg Winter’s interactive cages and hundreds of other works. I met the museum director, Dr Marion Ackermann, over coffee in the lobby, not from behind a giant executive desk. This is not a museum that wants to intimidate anyone. Stuttgart people have a reputation for being very down to earth and a little careful with their money. They’re not easily pleased, but the Kunstmuseum seems to have pleased them.

The next year will see plenty more for the citizens of Stuttgart (and their visitors) to get excited about. Already the little jewel has a setting: a smart, urbane bank of office buildings by the same architects, as understated and businesslike as a Boss suit. On a neighbouring plot Hascher and Jehle are hatching their third scheme, the Königsbau Passagen, a mixed use development elegantly inserted behind the massive neoclassical columns of a major 19th century city landmark. Equal parts office development, shopping mall and style temple, the Königsbau Passagen completes early next year and will see Stuttgart join Hamburg, Berlin and Düsseldorf in the anointed among stylish German cities. Because that’s when Stilwerk opens its fourth design and interiors mall in the complex.

Up at the Weissenhofsiedlung, the two Le Corbusier houses are being refurbished in time to open in April 2006 as a visitor attraction. One of the houses will form a museum; the other will be refurnished in its original, revolutionary 1927 style. The car makers are getting in on the act too, with an impressive new museum complex by Dutch architects Van Berkel & Bos out at the Mercedes plant to house the company’s historic vehicle collection. It promises to be a suitable setting for the massive 1930s limousines, the historic racing cars and the classic 1954 300 SL Gullwing coupé

When the shopping and sightseeing is done, style-conscious visitors make for the elegantly minimalist Italian restaurant Oggi on the little square behind the Kunstmuseum. Or they dine at some other modern Mediterranean: Fellini in Günther Behnisch’s landmark Landesgirokasse office building, or Le Grek, a chic Greek in the Kriegsbergstrasse. If they’re feeling more casual, they go for cocktails to Barcode on Theodor Heuss Strasse.

And so to bed. If you want sleep of Mercedes-like perfection you’ll probably choose the businesslike, modernist mo.hotel in the suburb of Vaihingen, because it’s right next to the DaimlerChrysler global training centre. If your taste runs to Weimar vamps in their scarlet glory, you’ll be happier at the Zauberlehrling boutique hotel in the funky Bohnenviertel. If this relaxed, but over-achieving German city has inspired you, your dreams may be both enjoyable and visionary. But they won’t necessarily be about cars.

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