VW and PSA may refuse to release compact cars

VW and PSA may refuse to release compact cars

February 11, 2019 0 By autotimesnews

The mini car segment has always been stable, especially in Europe, accounting for 8% of sales for the entire market. However, the situation is changing, as automakers find it increasingly difficult to profit from their sales due to stricter environmental standards and higher technology demand.

The German Volkswagen Group and the French PSA Group expressed uncertainty about their future in the mini-car segment. VW Group CEO Herbert Diss complained about even more stringent environmental regulations, which will be introduced in 2020 – he fears that minicars will not be able to meet new standards, while maintaining a competitive value.

For example, now the European price tag on the most compact model VW Up! starts from 11 thousand euros, but due to the introduction of new standards, the model can rise in price by 3,500 thousand euros. The company is not sure how many customers can afford (and want) to buy entry-level models.

As for the PSA Group, the production of their Peugeot 108 and Citroen C1 minicars may cease after Toyota bought their joint plant in the Czech Republic in 2021. In this case, the French may simply leave the segment, since it may be impossible to postpone production and is simply unprofitable.

It is believed that increasingly stringent environmental regulations and more and more expensive modern technology in cars will ultimately negate the life of the mini-car segment. It is possible that the development of electrification will be able to save it, but this is not about the short term, since electric vehicle technologies are still quite expensive.