A compact wheel loader having a hydrostatic transmission and two modes of operation. In a normal mode, a demand lever is used to set the engine speed, and displacement of the swash plate of the hydraulic pump of the transmission is set by a hydraulic pilot pressure (Ps) that increases with engine speed, so that the transmission ratio automatically decreases as the engine speed increased. In a creeper mode, the engine is set to operate at a high speed to meet the demand of powered implements of the loader, and the wheel speed is controlled by the demand lever setting the transmission ratio by varying the hydraulic pilot pressure (Ps).