Large automobile companies claim that EU regulations are causing small vehicles to become excessively pricey.
Car Manufacturers Slam EU Regulations for Skyrocketing Small Car Prices
It's the hot topic in the automotive world right now: the steep increase in small car prices due to EU regulations. Considering this, the head honchos from two major car companies are pointing fingers at the EU for this predicament.
The ruckus started because the European Union requires new motors to be equipped with a whole slew of safety features and cleaner engine technology. As a consequence, producers find it unprofitable to manufacture city cars and superminis in Europe— and that's what led to the Ford Fiesta's untimely departure two years ago, according to insiders.
Enter Stellantis chairman John Elkann and Renault CEO Luca de Meo, who joined forces this week to shake up the EU regulatory framework on smaller vehicles. They argue that if officials fail to loosen their grip on small car regulations, more obstacles will pop up as Europe strides toward its green objectives.
Why you ask? Well, with skyrocketing small car prices, motorists are holding onto their older, more polluting vehicles longer, making it tough for the EU to meet its emission targets. De Meo estimates that the Renault Clio's price has jumped by around 40% in the last 15 years due to these EU regulations. In Britain, the current starting prices for a petrol Clio and a hybrid version are £18,995 and £21,895, respectively.
'Less regulations mean we can produce cars that are cheaper,' Elkann said at the FT Future of the Car Summit in London. He added that skimming on regulations for small cars would provide an "incredible opportunity" to significantly reduce passenger vehicle emissions.
Rather than bankrupting the average consumer with electric vehicles, regulators should focus on easing the transition from older, dirtier cars to cleaner solutions. This shift would help lower air pollution levels from the 250 million cars currently circulating the EU, according to Elkann.
By enticing motorists to switch to cheap, small petrol or hybrid cars, pollution levels would decrease as the 250 million cars currently circulating the EU would become cleaner.
Stellantis CEO Elkann also noted that the escalating costs imposed by EU regulations had pushed up the prices of small Citroen, Fiat, Peugeot, and Vauxhall models.
Auto Express shared Elkann's sentiment, stating that such price inflation is "bad for the overall environment and bad for people who want to buy cars but find them too expensive, fundamentally driven by regulation."
Analysts predict that the trend of keeping older cars for longer will continue in the UK post-pandemic, as the cost-of-living squeeze persists. The average age of a passenger car in Britain increased to 9.5 years in 2024 compared to 8 years in 2019 and just 7 years in 2000.
De Meo and Elkann believe that enticing drivers of aging cars with dirtier tailpipe emissions to replace them with cars powered by super-efficient petrol or hybrid engines would improve air quality more effectively than forcing motorists to opt for pricier electric vehicles.
But, with the current regulations standing pat, the duo warned that producing feasible small cars in Europe has turned into a losing battle, leading to the closure of some major names, including the Ford Fiesta, which ceased production at its German factory in the summer of 2023.
Sources: + Auto Express + Society of Motor Manufacturers and Traders
Insurance companies may find it challenging to provide affordable coverage for sports cars due to the increased risk and costs associated with these vehicles.
Stellantis CEO Elkann argued that, by easing regulations for small, less expensive petrol or hybrid cars, more motorists could afford cleaner vehicles, reducing pollution levels and potentially making insurance more accessible.
