Skip to main content
Sister Publication Links
  • Automotive News
  • Automobilwoche
  • Automotive News Canada
  • Automotive News China
Subscribe
  • Subscribe
  • Newsletters
  • Login
  • HOME
    • Latest news
    • Automakers
    • Suppliers
    • New Product
    • Environment/Emissions
    • Sales By Market
    • On The Move
    • Auto Shows
    • Munich Auto Show
    • Geneva Auto Show
    • Paris Auto Show
    • Beijing Auto Show
    • Shanghai Auto Show
  • Features
    • Long Read
    • Interview of the Month
    • Focus on Electrification
    • Focus on Technology
    • Segment Analysis
    • Cars & Concepts
    • Supplier Spotlight
    • Europe By The Numbers
  • Opinion
    • Blogs
    • Commentary
    • Guest columnists
  • Photos
    • Photo Galleries
    • Geneva Photo Gallery
    • Beijing Photo Gallery
    • Frankfurt Photo Gallery
    • Paris Photo Gallery
    • Shanghai Photo Gallery
  • Podcasts
  • Car Cutaways
  • EVENTS
    • ANE Congress
    • ANE Rising Stars
    • ANE Eurostars
  • More
    • Publishing Partners
    • Social Media
    • Contact Us
    • Media Kit
    • About Us
    • Capgemini: All or nothing: Why circular business models require a holistic approach
    • Capgemini: Invent Head on automotive takeaways from CES 2023
    • Capgemini: Securing the industry's future through a radical rethink
    • Capgemini: Succeeding with the automated driving journey through AI
    • Capgemini: The circular economy is spurring new thinking on EV batteries
    • Capgemini: Toyota and Capgemini leaders on how OEMs can handle industry changes and succeed
    • HEXAGON: Plugging into data is the only way to make winning EVs
    • TUV Rheinland: Ideas, services and certifications for smart mobility
    • TUV Rheinland: Testing of automated and autonomous vehicles on test tracks
    • Toyota Europe
    • UFI Filters
    • Facebook
    • Instagram
    • LinkedIn
    • Twitter
MENU
Breadcrumb
  1. Home
  2. Automakers
February 08, 2019 06:38 AM

Europe's minicar segment to shrink as VW, PSA mull axing their smallest cars

Nick Gibbs
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print

    Opel’s decision to end production of the Adam (shown) and Karl shrinks the minicar segment.

    The increasingly difficult challenge of selling minicars profitably will likely force more automakers to cut models in the segment over the next five years. Volkswagen Group and PSA Group, two of the biggest players in the segment, have expressed concerns about staying in the sector, while this year Opel/Vauxhall will end sales of the Adam and Karl/Viva minicars.

    The fallout will cause minicar sales to drop to below 1 million by 2021 from 1.14 million in 2017, analyst firm LMC Automotive forecasts. “Margins are thin on these type of cars and that is why manufacturers often collaborate when producing them,” said Justin Cox, LMC’s director for global production.

    One such collaboration is between PSA and Toyota to build three minicars -- the Toyota Aygo, Peugeot 108 and Citroen C1 -- in a jointly owned factory in the Czech Republic (making the country the largest supplier of minicars to Europe). Last November, however, the automakers announced that Toyota would take over the factory starting in 2021, leading to reports that PSA would exit the segment.

    “The ability of any carmaker to make a profit in that segment is under pressure because of all the technology we have to add,” Maxime Picat, PSA’s operational director for Europe, told journalists in January without revealing the company’s long-term plans for the segment.

    Picat also referenced previous statements by VW Group saying largely the same thing. “We have heard VW Group will stop development on that segment,” he said.

    VW Group CEO Herbert Diess has previously complained that minicars are in danger of no longer making a positive CO2 contribution, one of their big selling points to companies facing potential fines for exceeding tougher pollution limits that start to take effect in 2020. In addition, Diess said during last month’s Detroit auto show that prices for a minicar such as the Up, which currently emits 95 grams of CO2 per kilometer, the targeted level that automakers need to reach in Europe by 2021, could grow by about 3,500 euros to be compliant with pollution rules in 2030. The Up currently retails for about 11,000 euros. “I am not sure how many customers could still afford our entry-level models,” Diess said.

    Electric jolt

    Electric power could rejuvenate the segment if battery-driven models become cheap enough. VW sells the full-electric e-Up and this year sister brand Skoda will add an electric version of its related Citigo. Spanish sibling Seat is expected to follow with a full-electric version of the Mii minicar. Meanwhile, Fiat has said its segment-leading 500 will add a battery-powered derivative, which is expected within two years. Fiat will also add a mild-hybrid version of the 500 as well as a wagon to be called the Giardiniera.

    Last autumn, Citroen CEO Linda Jackson indicated the brand was also considering going down the electric route for its entry cars. “That segment is getting smaller and smaller in terms of volume, so I think it’s going to evolve,” she told Automotive News Europe. Asked which direction the C1 could go, she said: “I think probably electric.” Holding Citroen back from making that move is PSA’s requirement that new models aren’t restricted to just one type of powertrain. “What we prioritize is a multi-energy approach,” Picat said in January. Some automakers are happy with the status quo. Toyota’s Aygo is Europe’s No. 4-selling minicar, comfortably outselling the Citroen and Peugeot models built in the same plant. The Aygo accounted for 86,772 sales through November, up 9.4 percent from the year before.

    The Fiat 500 is the dominant minicar in Europe. A full-electric version is due within two years.

    Crucial for conquests

    “The A-segment [minicars] is a very important portion of the market for us. It brings new customers into our fold,” Toyota Europe CEO Johan van Zyl told ANE. He said the profile of a minicar customer was much younger than the average age of buyers for the rest of Toyota’s range, adding that the Aygo was the brand’s biggest conquest model.

    The company has hinted that the next Aygo could be given a higher, more SUV-like stance. “Is there a risk we get a more crossover design, a less traditional body type? It’s a possibility,” Toyota Europe sales boss Matt Harrison told ANE at the 2018 Paris auto show. That type of model has been successful for Suzuki with the Ignis, which accounted for 40,760 sales through November, according to JATO figures, giving it 13th place in the segment ahead of the Citigo and Mii.

    The Kia Picanto also had a successful year. The model was launched in 2017 with more personalization options and a sporty looking GT-Line variant and last year Kia sold 70,695 units, up 19 percent on the year before. Another model on the rise was the Renault Twingo, with sales increasing 11 percent to rank fifth behind the Aygo. Renault also added a sporty GT version of the Twingo last year.

    Cheapest option

    Sporty or crossover versions might give the range some sparkle, but the reality is that most minicars are bought because they are the cheapest option -- selling for an average price of 14,044 euros in Germany, France, Spain and Italy in November, according to JATO figures. “Their main advantage continues to be their price,” JATO global analyst Felipe Munoz said. Cost-conscious Italy was the biggest minicar market through November with sales of 284,633.

    Italy is where the majority of Pandas are sold -- 73 percent last year according to LMC. A slump in popularity of the aging Panda, down 12 percent through November, is expected to be another drag on the sector in 2019, LMC said. The segment might be under pressure, but it remains an important gateway into car ownership. Said JATO’s Munoz: “There will always remain a market for competitively priced, basic segment cars in Europe.”

    Toyota will take over its joint factory with PSA in Kolin, Czech Republic, in 2021. Toyota builds the Aygo (shown) at the plant.

    AUTOMOTIVE NEWS EUROPE MONTHLY MAGAZINE

    This story is from Automotive News Europe's latest monthly magazine. To view the new issue, as well as past issues, click here.

     

    RECOMMENDED FOR YOU
    Toyota to increase Yaris capacity at French plant
    Recommended for You
    Toyota Yaris Cross
    Toyota to increase Yaris capacity at French plant
    Connected cars technology panel
    Stellantis sees new ways to generate profits from vehicle software
    VW logo in car mirror
    VW's rights may have been breached by Italian antitrust fine, EU court adviser says
    Sign up for free newsletters
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    Get Free Newsletters

    Sign up and get the best of Automotive News Europe delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    SUBSCRIBE TODAY

    Get 24/7 access to in-depth, authoritative coverage of the auto industry from a global team of reporters and editors covering the news that’s vital to your business.

    SUBSCRIBE NOW
    Connect with Us
    • Twitter
    • Facebook
    • LinkedIn
    • Instagram

    Founded in 1996, Automotive News Europe is the preferred information source for decision-makers and opinion leaders operating in Europe.

    Contact Us

    1155 Gratiot Avenue
    Detroit MI  48207-2997
    Tel: +1 877-812-1584

    Email Us

    ISSN 2643-6590 (print)
    ISSN 2643-6604 (online)

     

    Resources
    • About us
    • Contact Us
    • Advertise with us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Awards
    • Rising Stars
    • Eurostars
    • Leading Women
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Automotive News Europe
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • HOME
      • Latest news
      • Automakers
      • Suppliers
      • New Product
      • Environment/Emissions
      • Sales By Market
      • On The Move
      • Auto Shows
        • Munich Auto Show
        • Geneva Auto Show
        • Paris Auto Show
        • Beijing Auto Show
        • Shanghai Auto Show
    • Features
      • Long Read
      • Interview of the Month
      • Focus on Electrification
      • Focus on Technology
      • Segment Analysis
      • Cars & Concepts
      • Supplier Spotlight
      • Europe By The Numbers
    • Opinion
      • Blogs
      • Commentary
      • Guest columnists
    • Photos
      • Photo Galleries
      • Geneva Photo Gallery
      • Beijing Photo Gallery
      • Frankfurt Photo Gallery
      • Paris Photo Gallery
      • Shanghai Photo Gallery
    • Podcasts
    • Car Cutaways
    • EVENTS
      • ANE Congress
      • ANE Rising Stars
      • ANE Eurostars
    • More
      • Publishing Partners
        • Capgemini: All or nothing: Why circular business models require a holistic approach
        • Capgemini: Invent Head on automotive takeaways from CES 2023
        • Capgemini: Securing the industry's future through a radical rethink
        • Capgemini: Succeeding with the automated driving journey through AI
        • Capgemini: The circular economy is spurring new thinking on EV batteries
        • Capgemini: Toyota and Capgemini leaders on how OEMs can handle industry changes and succeed
        • HEXAGON: Plugging into data is the only way to make winning EVs
        • TUV Rheinland: Ideas, services and certifications for smart mobility
        • TUV Rheinland: Testing of automated and autonomous vehicles on test tracks
        • Toyota Europe
        • UFI Filters
      • Social Media
        • Facebook
        • Instagram
        • LinkedIn
        • Twitter
      • Contact Us
      • Media Kit
      • About Us