Minicars are not very profitable for French companies.
PSA prepares for the merger with Fiat Chrysler Automobiles. This includes reviewing its model range, and rethinking its strategies. The French manufacturer will likely end production of its two smallest vehicles on the European market as part of the restructuring.
Although nothing has been confirmed, there is a report from Automotive News Three Reuters According to sources, the Citroen C1 and Peugeot 108 are being sold. This is due to PSA’s decision to exit the Czech joint venture that produces the minicars and the Toyota Aygo.
One source told Reuters that PSA was selling both the factory business and the A segment. This is the same deal as today and is the reason why European manufacturers have arguably lost most of their money in Europe. Another source said that the merger with FCA could make it possible to replace current projects with new ones. The merger is turning the tables, especially considering that the A segment, which includes the Panda and the 500, is integral to Fiat history.
There are two main reasons PSA has decided to leave the segment. The first is that minicars with combustion engines are becoming more difficult to sell. They require expensive exhaust gas filtration systems in order to comply with European emission standards. Minicars are no more economically viable.
With the PSA-FCA merger looming, there will be significant overlap in minicar segments with models from both companies. FCA’s Fiat is a well-known nameplate in this class, and leaving Panda and 500 models without any direct competitors from the family is the best solution.