SUMMARYThis paper addresses the design of low‐level controllers for leader–follower formations of nonholonomic vehicles in the presence of bounded measurement delays. The concept of input‐to‐state stability is extended to encompass the effect of bounded delays and restrictions on the input. A method is proposed to integrate a Smith predictor in a backstepping design on the basis of nested saturations and nonlinear small‐gain assignment, which allows for time delays in the feedback loop. Robustness analysis under uncertain bounded time delays is provided, and design tradeoffs resulting from the use of bounded controls are discussed. Illustrative simulations are shown to validate the design and robustness analysis in the context of a simple leader–follower trailing control problem. Copyright © 2012 John Wiley & Sons, Ltd.