How to save the city car

Emis­sion regs pose threat

Autocar - - CONTENT - JIM HOLDER

The mes­sage was as bleak as it was clear. “If Europe is pur­su­ing this le­gal tar­get, there is no sin­gle busi­ness case for cars the size of the Up,” Volk­swa­gen sales and market­ing boss Jür­gen Stack­mann told Au­to­car at the re­cent Geneva mo­tor show.

These are words be­ing echoed around the au­to­mo­tive in­dus­try, trig­gered by in­com­ing leg­is­la­tion to re­duce emis­sions and en­force higher min­i­mum safety stan­dards, both of which threaten to add sig­nif­i­cant cost to cars al­ready be­ing sold on pa­per-thin profit mar­gins. The city car is fac­ing ex­tinc­tion.

One source Au­to­car spoke to es­ti­mated that the profit from the sale of some city cars is as lit­tle as £100 per car for the man­u­fac­turer and a fur­ther £100 for the re­tailer. Ser­vic­ing usu­ally nets an­other £100 of profit, but be­cause the cars are rel­a­tively cheap to buy and run, few buy­ers use the ap­proved fran­chised net­work beyond two years, re­mov­ing fur­ther earn­ings po­ten­tial.

So what can be done to save the city car?

Multi-brand co-op­er­a­tion

The VW Group has led the way in try­ing to achieve profit via scale, sell­ing the al­most iden­ti­cal Up, Seat Mii and Skoda Cit­igo. At their peak in 2013, they achieved a com­bined 202,000 an­nual sales in Europe.

And still, as Stack­mann says, it is strug­gling to achieve enough sales to make man­u­fac­tur­ing the car prof­itable. Fresh from Geneva, where Fiat reimag­ined the Panda as an elec­tric car, Fiat Chrysler Au­to­mo­biles boss Mike Man­ley be­lieves ne­ces­sity may be the mother of in­ven­tion – and that in­ven­tion may re­quire cross-com­pany co-op­er­a­tion.

“That seg­ment won’t go away,” he said. “There will be a way to ful­fil that cre­atively. Maybe that’s with mass co-op­er­a­tion. Some­one will find a way to fill that gap.”

Soon-to-de­part Mit­subishi COO Trevor Mann high­lighted one po­ten­tial prob­lem of that ap­proach, as he dis­cussed a po­ten­tial suc­ces­sor to the Mi­rage, a car the firm has tried to sell glob­ally, rather than just in Europe.

“If you try to build one car for both Asia and Europe, it’s clear you end up pleas­ing nei­ther,” said Mann. “It’s ei­ther too lowly specced or too highly specced, de­pend­ing on your per­spec­tive.”

Make all city cars EVS

In Geneva, Fiat con­firmed it will launch its new-gen­er­a­tion 500 next year, of­fer­ing it as an elec­tric-only model. What it didn’t shout quite so loudly about is that the cur­rent car – com­plete with petrol en­gines – will re­main on sale along­side it. It’s worth not­ing that the av­er­age trans­ac­tion price of a 500 is sig­nif­i­cantly greater than that of most city cars, given its fash­ion­able ap­peal and nu­mer­ous per­son­al­i­sa­tion op­tions.

But Mann also sees a fu­ture for elec­tri­fy­ing city cars. He high­lights Ja­pan’s boom­ing kei car mar­ket as an ex­am­ple. “We’re look­ing to de­velop elec­tric tech­nol­ogy for kei cars and you have to con­sider if it could be ap­plied to city cars as a whole,” he said. “Yes, the kei car reg­u­la­tions of­fer some ad­van­tages, but the same prin­ci­ples could be ap­plied else­where.”

Car shar­ing

An­other CEO un­will­ing to give up on city cars is Jean-christophe Ku­gler, boss of Re­nault Europe. “I’ve been ask­ing my teams to in­ves­ti­gate deeply this seg­ment,” he said. “A lot of car mak­ers are quit­ting the seg­ment but the needs from our cus­tomers are still there.”

Ku­gler be­lieves dra­matic so­ci­etal changes wrapped up in elec­tri­fi­ca­tion, con­nec­tiv­ity and au­ton­omy could pro­vide the an­swers. “Let’s look at it and un­der­stand what is the evo­lu­tion in the main cities,” he said. “We want to un­der­stand bet­ter the evo­lu­tion of car shar­ing. Does it have a role to play? Those are all ques­tion marks. We have no de­ci­sion yet but we’re in­ves­ti­gat­ing. Car shar­ing might make the Twingo more vi­able in fu­ture, for in­stance.”

A new mo­bil­ity so­lu­tion

If none of the above pro­vides a work­able so­lu­tion, Seat boss Luca de Meo reck­ons a com­bi­na­tion of all three could.

Us­ing the odd­ball – if rather Re­nault Twizy-like – Seat Min­imo con­cept to shape his ar­gu­ments, he says small, rel­a­tively cheap elec­tric ve­hi­cles rented to users by the minute could save the city car.

“Wouldn’t the cus­tomer and our busi­ness be bet­ter off if they could rent a cheaper, but more fit-for-pur­pose ve­hi­cle for, say, 20 cents a kilo­me­tre?” he said. “If that ve­hi­cle was in more use, shared by users, and it cov­ered 150 to 200 miles a day, I’d be look­ing at €15,000 [£12,800] of in­come over three years. It would be more prof­itable than sell­ing a car.”

The is­sue, of course, is that a Twizy re­tails for around £8000 plus bat­tery rental, while a Mii is just below £10,000. For de Meo’s equa­tion to work, a Min­imo is go­ing to have to be sig­nif­i­cantly cheaper to pro­duce.

Mii and Cit­igo are vir­tu­ally iden­ti­cal to the Up to keep costs low

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