This paper presents the design and implementation of a small-scale hardware-in-the-loop test environment for lateral vehicle dynamics controllers. The test rig consists of a conveyor belt and a 1:10 scale model vehicle. The vehicle is anchored to the frame of the conveyor belt using a special fixture, which constrains only the longitudinal displacement of the car. Therefore, the longitudinal velocity of the vehicle is provided by the conveyor belt, while the steering is generated by the computational unit, where various control methods can be implemented. The test rig is equipped with sensors that provide accurate measurements of the position and orientation of the car, which can be used as feedback in the control algorithms. The paper includes a case study, where the analytical stability analysis of a lane-keeping controller is verified with experiments on the test rig. The proposed test environment provides a compact, cost effective and versatile framework for the testing of various steering control methods in a running vehicle, while maintaining the benefits of a controlled laboratory environment. The experimental setup can also be used for educational and demonstrational purposes.