16-05-2025
EU regulations are making small cars too expensive, according to bosses at two major manufacturers
Bosses at two major car manufacturers have pointed the finger at the European Union for triggering a huge increase in the cost of new cars in recent years - especially smaller models that are no longer affordable to the masses.
EU regulations for all new motors to have an abundance of safety features and be powered by cleaner engine technology has made it 'unprofitable' to produce city cars and superminis in Europe - and is the reason for the demise of the Ford Fiesta two years ago, they said.
Stellantis chairman John Elkann and Renault CEO Luca de Meo teamed up this week to call on the EU to relax its regulatory grasp on smaller vehicles.
They warn that failure to do so will create more hurdles for Europe to achieve its green targets. This is because motorists are unable to afford the latest small motors and instead are keeping their older - more polluting - cars for longer.
De Meo said these regulations have inflated the price of the Renault Clio by around 40 per cent in the last 15 years. In Britain, the French supermini currently start from £18,995 with a petrol engine; one with a hybrid powertrain is £21,895.
'If we have less regulations, we can make sure that we build cars that are less expensive and so they'll be more affordable,' said Elkann, appearing at the FT Future of the Car Summit in London via video link on Thursday.
Eklann said the inflationary pressures of meeting EU regulations has also hiked the price of small Citroen, Fiat, Peugeot and Vauxhall models - all of which sit under the Stellantis banner.
In the co-presentation, Elkann said a relaxation of rules for small cars would provide an 'incredible opportunity' to slash passenger vehicle emissions.
Rather than trying to force every motorist into an expensive electric vehicle - which typically are at a premium over an equivalent petrol model - he says regulators and governments should be looking to how they can make it easier for motorists with older polluting cars to replace them with cleaner solutions as a stepping stone.
By encouraging motorists to switch to cheap, small models with economical petrol or hybrid engines would help reduce pollution levels from the 250 million cars currently circulating the European Union.
De Meo said EU regulations have inflated the price of the Renault Clio by around 40% in the last 15 years. In Britain, the French supermini currently start from £18,995 with a petrol engine; one with a hybrid powertrain is £21,895
'That is not only good for the overall environment, it's good for people who want to buy cars but [find them] too expensive, fundamentally driven by regulation,' Auto Express quoted during Elkann's address.
The Stellantis boss referenced the increasing average age of Europe's cars, which is now above 10-years-old. In countries like Greece, the typical motor is 17 years old.
And there is a similar trend in the UK.
The Society of Motor Manufacturers and Traders says the average age of a passenger car in Britain in 2024 increased to 9.5 years. In 2019 it was 8, and in 2000 it was just 7.
It shows that UK drivers - also grasped by a cost-of-living-squeeze post-pandemic - are holding onto older, more polluting, cars for longer.
De Meo and Elkann believe that if drivers of ageing cars with dirtier tailpipe emissions could be persuaded to buy cars with super-efficient petrol or hybrids powertrains, air quality would improve more dramatically than attempting to force motorists to choose EVs at higher prices.
But with the existing regulations in place, the pair warned that superminis produced in Europe have become unprofitable - which has led to the loss of some major names in recent years, not least the Ford Fiesta, which ceased production in Germany in summer 2023.
After 47 consecutive years of production and 22million global sales - 4.8 million in the UK alone - Ford killed off the Fiesta two years ago to make way for an EV replacement
Ford ceased production of the Fiesta - Britain's all-time most popular car - at its Cologne factory (left) in July 2023. Luca de Meo said it's because it is 'unprofitable' to make small cars in Europe. Pictured right: the last Fiesta to come off the assembly line signed by staff
Renault's de Meo said that the French automaker already 'doesn't make money' on some small cars, adding that between 2015 and 2030 regulations will raise the cost of a medium-sized Renault-built car by 20 per cent and for small cars by 40 per cent.
'Small cars still have a purpose and they could actually reboost the automotive market in Europe,' de Meo said.
This is Money recently reported on manufacturers killing off several much-loved internal combustion engine models in the last 36 months in the pursuit to electrify their ranges for a zero-emissions future.
Small and relatively inexpensive cars have typically been first for the chopping block as brands go about reshaping their model line-ups ahead of the ban on new petrols and diesels in the UK from 2030 - and 2035 in the EU.
This also includes popular petrol cars of the likes of the Fiat 500 and VW Up.
As such, the number of ICE options available to motorists in the smallest 'A-segment' - commonly referred to as 'city cars' - has shrunk to just three choices.
While smaller, less expensive petrol models are disappearing from our roads, car makers are pushing to introduce more attainably priced EVs.
This week, Renault confirmed its upcoming Twingo - due to be revealed later this year and delivered from 2026 - will be sold in the UK. It has promised a sub-€20,000 price tag, which should mean less than £17,000 in Britain.
The least expensive EV currently on sale is the Dacia Spring, which starts from £14,995. The only model that's cheaper across all fuel types is Dacia's petrol Sandero supermini (from £14,715).
Only four other combustion engine cars are currently available in the UK for less than £17,000. This includes the Kia Picanto (from £16,065), MG3 (£16,425), Hyundai i10 (from £16,600) and Toyota Aygo X (from £16,845).
De Meo and Elkann's joint appearance comes just over a week after the European Parliament voted to fast-track softer EU CO2 emissions targets for cars and vans that will allow automakers more time to comply and reduce potential fines.
Sir Keir Starmer last month also eased the UK's Zero Emission Vehicle (ZEV) mandate rules - which demand an ever-increasing share of EV sales per year until 2035 - on the back of trade pressures triggered by President Donald Trump's Liberation Day tariffs on US vehicle imports.
