Minicar Market Shrinks in Europe

European demand for city cars is shrinking, prompting some of the largest makers of the A-segment cars to consider dropping the number of models they offer.

LMC Automotive predicts that minicar sales in Europe, which reached 1.17 million units in 2017, will fall below 1 million next year.

The decline could occur in big steps, because carmakers often pool their production of minicars to help lower costs and defend chronically thin profit margins for such vehicles. But that strategy collapses if a partner drops a shared model.

But Automotive News Europe notes that not all carmakers are worried. Toyota, for one, describes its Aygo minicar (pictured) as the brand’s largest source of conquest sales in Europe. And last year deliveries of the Kia Picanto and Renault Twingo minis climbed 19% and 11%, respectively.

In November Toyota announced it was buying out partner PSA in a venture that made three minicar variants: the Citroen C1, Peugeot 108 and Toyota Aygo. PSA noted in January that the future for minicars is clouded by the cost of enabling them to meet planned carbon dioxide emission limits by 203.

Volkswagen AG’s €11,000 ($12,500) Up! minicar, for example, emits only 90 grams of carbon dioxide per kilometer—enough to meet 2020 European standards. But CEO Herbert Diess has warned it could cost a prohibitive €3,500 ($4,000) per car to meet 2030 limits.

ANE points out that switching to electric power could save the segment, assuming battery costs fall sufficiently.