Chinese brands, Fiat, Toyota commit to transform Europe's minicar segment

The minicar segment almost halved in 2022 from a recent high of 1.2 million in 2017 as more volume manufacturers axed their smallest combustion-engine models in a bid to both cap rising costs and reduce average fleet carbon dioxide levels.

The segment's sales decreased 21 percent to 677,496 in an overall market that was down 4.3 percent last year, according to market researcher Dataforce.

During 2022 minicars such as the Citroen C1, Peugeot 108 and Smart ForFour were withdrawn from the market, joining a long list of axed nameplates that includes the Skoda Citigo, Seat Mii, Ford Ka, Opel/Vauxhall Adam, Opel Karl and Suzuki Celerio.

More core models are scheduled to join the list of departures.

The Renault Twingo, the segment's No. 8-seller last year, will be discontinued next year, the company told French journalists in February.

The news prompted outpourings of nostalgia for the original model launched in 1992.

"It abolished classes and restored dignity to the most modest households," Thomas Morales wrote in French daily newspaper Le Figaro.

Meanwhile, Volkswagen is poised to cut the combustion engine version of the Up minicar next year, according to Dataforce predictions, and Smart will end production of the full-electric ForTwo in 2024.

Not everyone is abandoning the segment.

Fiat will continue to build the Panda, last year's segment winner, until 2026, the company has told unions organizing workers at the model's plant in Pomigliano d'Arco, southern Italy.

The Fiat 500, which was second on the minicar sales list behind the Panda last year, will continue to be built until 2027, according to Dataforce.

Italy remains a stronghold for minicars. Last year 85 percent of all Pandas sold across Europe were registered in Italy, according to Dataforce and the country's industry association, UNRAE.

Toyota, meanwhile, has given a fresh boost to the segment with last year's launch of the Aygo X, a higher riding replacement for the Agyo that adds SUV looks but retains the model line's low-cost combustion engine.

The car has proved to be a hit, reaching third place with 2022 sales of 69,517, putting the Aygo X ahead of the Hyundai i10 and Kia Picanto (see table below).

Hyundai has just face-lifted the i10 to sharpen its looks and added connectivity and assisted driving features previously found on much bigger cars.

The i10's eight-inch central touchscreen can now receive map updates over the air, while the car's suite of driving assist functions now includes lane centering. Hyundai will continue to sell the model until 2026, when it will be axed, Dataforce predicts.

The Kia Picanto, meanwhile, will be replaced with a new internal combustion model in 2024, Dataforce predicts, keeping costs down for drivers on a tight budget.

The segment, however, is facing rising costs from tougher emissions regulations on combustion cars, most recently with the Euro 7 proposal.

"Today, the ICE [internal combustion engine] doesn't fit any more because of the price," Denis Le Vot, head of Renault Group's low-cost Dacia brand, said in October.

He said that equipping a minicar with the technology needed to comply with Euro 7 emissions rules "would be ridiculous in terms of economics."

Dacia has chosen to switch to electric, starting with the battery-powered Spring that it imports from China. Spring sales rose 77 percent last year to 48,728, landing it at No. 7 in the minicar sales.

Right now, Dacia and Fiat, with the fourth-placed New 500, are the two brands most committed to EVs in the segment. As a result, electric cars accounted for 27 percent of minicar sales last year (see table below).

Minicars had Europe's fifth-highest EV share, despite VW's decision to reduce production of the e-Up electric version of its minicar, resulting in a 57 percent sales decline.

Making money from small electric cars given the cost of batteries remains hard work, but China's embrace of the electric minicar is having a knock-on effect in Europe, which is increasingly being targeted with imported models.

New Chinese entrants in the sector this year, according to Dataforce, include the Leapmotor T03, which uses a 41-kilowatt-hour lithium iron phosphate battery. LFP batteries are less expensive than lithium ion packs.

Also coming is the DYO, a Chinese EV imported by Germany company Elaris, which promises a range of 265 km for the two-seater.

Elaris says it has 80 outlets in Germany and Austria and that the lease price on the DYO will be 39 euros a month, excluding value added tax, when it arrives in June.

Italy's DR Automobiles, meanwhile, has launched its smallest model yet, the full-electric 1.0 at 3200 mm long, with a 120 kph top speed, a claimed range of 210 km and a starting price of 25,900 euros. DR rebrands Chery models from China.

More-established automakers will also introduce electric models in the sector, which has the advantage of bringing in younger customers who seek lower prices.

Citroen offers the Ami electric quadricycle, which has a top speed of 45 kph, at well below 10,000 euros (8,190 euros in France). Fellow Stellantis brand Opel sells the Rocks-e version of the quadricycle, and Fiat is expected to announce its own version.

Dataforce predicts that Smart, now a joint venture between China's Geely and Mercedes-Benz, will return to the sector in 2024 with the electric #2 (hashtag 2), which is expected to have four seats.

Also looking to go electric is Suzuki, with an electric Jimny mini SUV arriving in 2026, according to Dataforce.

Whether the sector can grow to its former size will depend on both battery costs and how readily China can homologate its wide range of minicars for Europe's roads.