Are small cars being pushed out of the market?
Whenever you look at the plans of car manufacturers, there’s not much talk about or space for future small cars (A- or B-segment). Manufacturers explain that stringent emission rules make them too expensive. Couldn’t it be that they don’t want to sell them anymore because they don’t make enough money per unit?
If you talk to PSA, they openly say that there will be no successor anymore for the Citroën C1 or Peugeot 108. This means that the technically similar Toyota Aygo will also disappear unless Toyota is investing in a new one all by itself.
At VW, they are hesitating about a successor for the Up! (with its brothers Skoda Citigo and Seat Mii), but the last rumors are that it still will be continued. Fiat is hesitating about the fate of the little Panda. Ford has no Ka anymore.
Until last year, they were assuring us at Renault that there would be a successor for the Twingo. Recently, the new CEO, Luca de Meo, told the French press that Renault would concentrate on the C-segment. Quite amazing when you know that their European bestseller for years now is the Renault Clio and the SUV-sibling Captur (both B-segment).
Blame the EU
A lot of manufacturers point their finger to the EU if you ask why. They say that new regulations, be it for emissions or safety, make little cars too expensive to produce so that they won’t sell anymore.
As of 2021, all manufacturers have to comply with an average fleet emission of CO2 of 95 g/km. In the following years, this limit will even become more stringent. Also, the emissions of toxic gases like CO, NOx, and others will be further regulated with lower limits.
From the safety side, more and more drive aid systems and safety features are becoming compulsory, which makes the price of a car going up as well. Logically, this increase will have a more significant impact on the price of a small car.
More money per car
What the manufacturers don’t tell us, is that they aren’t interested in producing small cars anymore. They want to earn more money per unit, something which is much more difficult to realize with a small car aiming at people with a smaller budget.
Practically all the CEOs of the car manufacturers have the same message nowadays: “our brand is so good that we want to go ‘upstream’; we want to make cars that can tackle the premium brands, and make much more money out of each (more expensive and bigger) car.”
The problem is that it’s getting very crowded in that ‘just under premium’ segment, everybody’s aiming at the same customer. And what will, for example, Renault do with its daughter company Dacia, a brand that has ‘low cost’ in its veins. Upgrade it, too?
We want more
Of course, the attitude of the customer has also changed. A lot of people drive in cars that are too big for their needs, usually SUVs. A trend that is not going to change soon, especially when manufacturers are pleased with this demand: they can ask more money for it, and it is easier to make the EV transition with SUVs than with regular sedans or hatchbacks.
But, of course, you can’t stretch the market eternally. This means that the car industry, once a powerful motor of democratization through the expansion of the automobile, will shrink in volume again. The industry will make more expensive cars for people who can afford it.
The others will have to look for other means of transport, something they’re doing already right now. And it will, of course, have a big effect on the second-hand market. Small, cheap cars will be a species that will be sought after.
The corona crisis may have retarded this tendency a little bit (everybody wants to be safe in his own ‘bubble’ again); in time, there will be fewer people owning a car. There will be opportunities enough for alternatives, like other means of transport but also car-sharing, renting, leasing, and a lot of possible other formulas that may appear.
Maybe the same car will be used more frequently and thus in a more sustainable way. That’s good for the climate and the environment. But it also creates a new type of barrier between haves and have-nots. The world is becoming a little less equal again.