23 June 2025
Stellantis Chair: Making the Small Passenger Car Affordable
By Tim Urquhart
Article Summary
In a bold move to address the declining affordability of passenger cars in Europe, Stellantis Chairman John Elkann is advocating for a shift in focus towards producing smaller, cost-effective vehicles. Highlighting the challenges posed by rising tariffs and supply chain issues, he emphasizes the need for a new regulatory framework that mirrors Japan's successful Kei car model.
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Stellantis Chairman John Elkann has issued a rallying cry to restore affordability in Europe’s passenger car market. As the sector grapples with rising tariffs and new supply chain concerns, Elkann has called for the industry to get back to basics.
Speaking at a recent Automotive News Europe conference, Elkann called for a new regulatory framework to facilitate the production of affordable small cars like Japan's Kei cars. Kei cars have been a staple of Japan’s automotive landscape since the 1960s, once capturing 40% market share before a tax change a decade slightly reduced their popularity. But they remain vital to the passenger car market, offering affordable, fuel-efficient vehicles suited to Japan’s narrow roads and urban mobility needs.
The rise and fall of small city cars
According to S&P Global Mobility data, sales of A-segment city cars—the closest European equivalent to Japan’s Kei cars—have plummeted from a peak of 1.6 million units in 2009 to just 393,000 in 2024. These figures provide important automotive industry insights into how regulation and cost pressures are reshaping the small-car segment. Elkann attributes this decline to stringent regulations that have driven up the weight and cost of small vehicles, rendering them either unprofitable for manufacturers or unaffordable to consumers—especially younger ones.
Fiat’s passenger car legacy and the shrinking European market
As a scion of the Agnelli family, this issue is personal for Elkann—his great-grandfather founded Fiat, a brand synonymous with affordable, compact cars that helped transform Italy socially and economically. This legacy began with the beloved Fiat 500 Topolino, launched in 1957, and extended across southern Europe.
After a 30-year hiatus, Fiat introduced the spiritual heir to the original 500 in 2006. Nearly two decades later, the modern 500 remains in production with only minor updates, a testament to its enduring appeal and strong design. The model joined the Panda in Fiat’s A-segment city car lineup, helping the automaker dominate Western Europe over the past 20 years.
Regulatory burdens and the case for new solutions
Despite their success, the modern Fiat 500 and Panda are exceptions in today’s shrinking A-segment market. In 2024, Fiat dominated the diminished European city car market, with the Panda and 500 among only four models in Western Europe to surpass 60,000 units in sales—the others being the Hyundai i10 and Kia Picanto. Just eight A-segment models remained in 2024, down from 24 in 2009. For Elkann, the reason is clear: regulation.
Speaking at the Automotive News conference in Turin, Elkann highlighted the regulatory burden facing the industry. “We are going to face more than 120 new regulations by 2030 [in Europe],” he noted. “If you look at our engineers, more than 25% just work on compliance, so no value is added.”
With the EU permitting different safety rules for quadricycles like the Citroën Ami and Fiat Topolino, which function as small city cars, Elkann sees an opening for a new regulatory category to enable truly affordable urban mobility. Unlike the plastic-clad Ami and Topolino—accessible from age 16 in most European countries but restricted on highways—Elkann envisions a more “carlike” vehicle built on existing small-car platforms and using existing powertrain technology.
Elkann argues these vehicles should be exempt from the growing list of mandatory advanced driver assistance systems (ADAS). The latest EU mandates from July 2024 include intelligent speed assist (ISA), autonomous emergency braking (AEB), driver drowsiness and attention warning (DDAW) and emergency lane-keeping systems (ELKS)—complex and costly features now required by law.
The impact on younger buyers
Elkann noted that as recently as 2019, nearly 50 models were sold in Europe below €15,000 (USD $17,400). Today, only one remains under that price. While inflation and rising input costs have played a significant role, the increasingly complex regulatory environment has also pushed new car prices beyond the reach of many, especially younger buyers, who are crucial as the next generation of customers.
There is growing evidence that younger consumers are increasingly reluctant to buy new cars. According to ACEA data from September 2024, the average age of passenger cars in the EU is 12.3 years, up from 10.9 years in 2013—mirroring a similar upward trend in the US, where the average age of vehicles rises to 12.8 in 2025. This trend reflects improvements in vehicle durability but also suggests that more young buyers are entering the car market as second-hand buyers. It also highlights the many urban mobility options—such as car-sharing services—available to young consumers.
Elkann’s call to action thus makes sense for both OEMs and consumers. Before his unexpected resignation this month, former Renault CEO Luca de Meo echoed these concerns in an AutoNews interview, urging France, Italy and Spain to lead efforts to revive the dwindling small-car segment by promoting “the mass development of small cars for urban travel and last-mile deliveries.”
Perhaps EU regulators should ask: from a safety perspective, does it make sense for lower-income drivers to rely on decade-old cars with fewer safety features instead of the more affordable, simplified, modern vehicles like those Elkann and de Meo propose?
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This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.