New Renault, Peugeot and Opel models forecast to give declining small-car segment a boost

Europeans continue to buy more small cars than any other body type, but sales have been hit by the rapid rise of SUVs and are forecast to carry on sliding despite a slew of new models arriving this year.

The key model for 2019 is the new Renault Clio. The current car was Europe’s best-seller through October last year, outpacing the Ford Fiesta and the Volkswagen Polo, according to data from JATO Dynamics.

The fifth-generation Clio, which will debut at the Geneva auto show in March, will have big changes to the interior, Renault Design Director Laurens van den Acker told Automotive News Europe. One example is that the new Clio will offer an even larger infotainment touchscreen on top versions. Van den Acker said he is glad he won his fight with management to equip the fourth-generation Clio with its vertical touchscreen – a move that Renault made before the first-generation Apple iPad was launched – because the system has been very popular with car buyers.

Another key launch this year is the replacement for the Opel/Vauxhall Corsa, which sits on a new small-car platform called CMP developed with parent PSA Group. The Corsa was the No. 6-selling model last year through October. The platform will be shared with the new Peugeot 208, which is expected to be the third big launch in 2019 in the small car sector. The 208 was last year’s No. 4-selling small car through October.

These three new models won’t have it easy. The VW Polo, Ford Fiesta and 10th-placed Seat Ibiza have all been replaced within the last 18 months.

Despite this surge of launch activity, analyst firm LMC Automotive doesn’t believe sales in the segment will grow this year. It estimates the final tally will be 2.71 million for the year, down from an estimate of 2.80 million for 2018, which was below the 2.82 million small cars sold in 2017. “The general trend is negative,” David Oakley, Europe analyst for LMC Automotive, told Automotive News Europe.

The sector still accounts for a fifth of all European sales, but that is down from 25 percent a decade ago. The key reason for the decline: the growth of small SUVs. The market for these taller, more desirable cars has doubled since 2014 to reach 1.8 million last year, according to LMC (which used estimates for December figures).

The growth of small SUVs has happened so fast it has taken some automakers by surprise. Seat for example initially planned to split production on Line 1 at its Martorell factory near Barcelona, Spain, at 65 percent for its new Ibiza small car and 35 percent for the new Arona small SUV, Seat President Luca de Meo told ANE. “Then just before starting production, we decided to invest more to go 50/50. Now we can manage 60 percent Arona and 40 percent Ibiza,” he said.

Small-car sales will receive a slight boost in 2021-22 when new versions of the Toyota Yaris (currently the No. 5 seller, and growing strongly), Dacia Sandero (No. 7) and Hyundai i20 arrive, according to LMC, but after that sales will continue their downward slide. Fiat’s decision last year to drop the Punto has also reduced the segment’s overall volume.

Selling electrified small cars is difficult because of the smaller margins involved, but manufacturers are increasingly willing to try. Much of the reason the Toyota Yaris is so popular is because of the availability of a full-hybrid model, which now accounts for half its sales in Europe, the company said.

Meanwhile, diesels have shrunk to just 14 percent of sales in the segment based on January-October figures. Skoda became the latest to remove a diesel option when it face-lifted the Fabia last year.

Later this year, Renault will reveal a new version of the Zoe, currently the only full-electric car in the segment. LMC estimates sales could reach 50,000 to 60,000 units between 2020-23, about double today’s figures. Also joining it will be an electric version of the new Opel/Vauxhall Corsa in 2020 and around the same time an electric Peugeot 208, sitting on the same e-CMP platform that PSA developed with its Chinese partner, Dongfeng Motor. Another contender in the segment will be the Honda Urban EV, which will be revealed at the Geneva show.

It’s fitting perhaps that France should be leading the charge for subcompact EVs because the country is by far the biggest European market for small cars, with sales of just over half million through October, beating Germany and the UK. In terms of market penetration for the sector, Greece is the leader with a 39 percent share, followed by Romania at 33 percent. France was fourth at 29 percent, while Germany was 20th with just 15 percent.

Body style diversity in the sector has massively shrunk in recent years. Convertibles have disappeared and largely so have the three-door versions of the hatchback, which accounted for just 7 percent of overall sales in the segment through October 2018, down from 10 percent in the same period the year before. Among the new-generation models joining the sector, only Ford decided to continue offering a three-door variant. Renault, Opel/Vauxhall and Peugeot are expected to drop three-door versions this year. Wagon variants still play a minor role, accounting for 5 percent of sales last year, according to JATO figures. Within the top 10, only the fourth-generation Clio and Fabia offer wagon alternatives. The new Clio will discontinue the body style.

Luca Ciferri contributed to this report