Small cars are at the end of the line, and it’s bad news for the pockets of Italians, accustomed for decades to buying essential low-cost models. Today SUVs and crossovers are advancing, clogging up our cities
It is a painful extinction, which weighs on the pockets of motorists and, paradoxically, also on the environment: the end of small cars. Until a few years ago, for 10-12 thousand euros you could bring home a new, basic but honest city car, the car for your first job or your first family; today, under 15 thousand euros, in the price lists, there is practically nothing left that resembles that idea of cars. Those who enter the dealership with yesterday’s budget discover that the entry segment of the market has not only been emptied, but replaced by something larger, heavier, more complicated and much more expensive.
Let’s imagine a thirty-year-old who in 2019 bought a basic petrol Dacia Sandero. With less than 8 thousand euros, turnkey, he managed to get a new car. Or he could have bought a Fiat Panda for 11 thousand euros. In 2026, the same customer returns to the dealer with a slightly increased budget, let’s say 12-13 thousand euros, convinced that it is enough to do the journey again. Instead he discovers that the Sandero is now close to 15 thousand euros while a Fiat Pandina exceeds this psychological threshold (unless you pay in installments or take advantage of a promotion). The truth is that the offer of truly accessible city cars and small cars has almost halved in just a few years. If in 2018 in the A and B segments there were around 35 models under 18 thousand euros, today, as Raffaele Fusilli, former number one of Renault Italia, recalls, those truly within the reach of an average family are less than ten. And the average price of a “small” car has gone from 15,500 euros in 2019 to over 24,000 over the course of a handful of seasons. The small cars that for decades have accounted for the bulk of volumes in Europe and in particular in Italy have lost around 40 percent of registrations between 2019 and 2025. While they retreat, SUVs and compact crossovers advance, occupying physical and symbolic space. Fusilli summarizes the situation like this: «We are experiencing a completely new industrial short circuit. On the one hand the policy that calls for electrification, on the other the regulations on safety and emissions that make it economically unsustainable for manufacturers to produce compact cars in the A and B segments”.
This change is in fact born within a regulatory framework which in recent years has pushed the industry in the opposite direction compared to the “small and light” car. Francesco Zirpoli, professor at the Venice School of Management and author of the book Self Destruction, cites a study by French researchers according to which «from 2000 to 2021 the average price of vehicles sold in Europe grew by 66 percent, compared to a Eurozone inflation rate of 38 percent. This would be the result of European policies which have foreseen gradations of emissions based on the weight of the vehicle which have favored the producers of large vehicles”. The result, explains Zirpoli, was a “constant shift in the averages of dimensions, weight, power and price of vehicles upwards”, with a double effect: penalizing generalist manufacturers anchored to the A and B segments and favoring premium and SUVs, which are easier to make profitable.
In the meantime, a further layer of technological complexity has been grafted onto all four new wheels. Since 2024, the European GSR2 regulation has made a long list of advanced driver assistance systems mandatory: automatic emergency braking, lane keeping, driver fatigue detection, intelligent speed limiter. These are important steps forward in terms of safety, but they come at a cost. Adding sensors, radars, cameras and control units weighs equally on a city car and an SUV; the difference is that on a 40 thousand euro car, one thousand or two thousand euros more technology is easily diluted, while on a small 12 thousand euro car it can erode the entire industrial margin. For manufacturers, the temptation to abandon the less profitable segments has become strong.
The race to go electric was grafted onto this regulatory and technological layer, which required gigantic investments in research, development and new platforms. Batteries remain the heaviest cost item and their impact on small models is proportionally greater. Many manufacturers have found themselves at a crossroads: investing resources in electric city cars which, to reduce costs, would have to be sold at prices incompatible with the traditional target, or concentrating efforts on SUVs and crossovers where unit margins are higher. The choice was almost everywhere the second. «While we are abandoning small cars», Fusilli further observes, «Asian manufacturers, as usual, are filling that void with compact and economical models». Europe closed the entry level door just as someone else opened it on the other side of the world.
This is where another piece of the story, hitherto under the radar, comes into play: Chinese brands and their local partners. While European manufacturers are moving up in size and price, Chinese brands are refining an offer of low-cost compact cars – thermal and electric – designed for markets where the small car is still central. In Italy the most visible case is that of the Molise group Dr, which imports and assembles models developed by Dragon manufacturers and repositions them with an Italian brand: today it mainly presides over the world of crossovers, but it is the type of player which, if regulatory and industrial conditions allowed it, could become the ideal vehicle to bring a new generation of essential small cars onto the market, less refined but accessible again.
The result of these choices is not only industrial, but also environmental. Statistics show that in Europe, from 2001 to 2019, CO2 emissions from road transport grew or remained substantially stable, while in Japan – where regulations favored the development of kei cars, microcars less than 3.4 meters long and with engines under 660 cubic cm – they decreased by more than 20 percent. The Europe that wanted to lead the transition ended up encouraging, directly or indirectly, the purchase of larger and heavier cars, often used in urban contexts where compactness would be a clear advantage. This is Fusilli’s rhetorical question: “Are we really saving the planet if we only produce 2.5 ton electric SUVs that cost as much as a two-room apartment?”.
On the social front, the disappearance of small businesses has an immediate impact. The gap between the average price of a new car and family income is widening: from 2011 to today the average cost of a car in Italy has risen by almost 60 percent, exceeding 30 thousand euros, while purchasing power has remained stagnant or has fallen. Those who can’t afford new cars keep older and older cars alive or take refuge in used cars that are more than ten years old, which are often more polluting and less safe. The car, which in the post-war period had become a symbol of democratic mobility, in many territories is returning to being a selective good, fully accessible only to those who can pay the bill for technology and regulations.
Three types of actors are trying to fill the void left by small cars. The first is represented by generalist manufacturers who, in order not to completely lose contact with the low-end range, experiment with “simplified” versions of larger models: this is the case of compact cars with interiors reduced to the essentials, dashboards without a large central screen and infotainment delegated to the driver’s smartphone. A minimalist logic which, if carried out to the end, could help shave hundreds of euros off the price of a car. The second group is that of new players – often Chinese – who are trying to enter Europe with electric city cars at aggressive price lists, made truly accessible only thanks to the combination of strong commercial discounts and public incentives: the Leapmotor T03 which, with scrappage and low ISEE, can go down to around 5 thousand euros, is the most obvious example. The third concerns micromobility: electric quadricycles like the Fiat Topolino or Citroën Ami, which are not cars in all respects but still offer a solution, albeit limited, to those who cannot afford a traditional one.
The question is whether it is enough. In his book Zirpoli insists on one point: the upward drift is not the result of a “natural” evolution of the market, but of a regulatory and industrial design that could be corrected. One way is to revise the criteria that link emissions to the weight of the vehicle, effectively ceasing to reward those who produce larger vehicles. Another is to look with less snobbery at the Japanese kei car experience, working on a European category of minicars with tax and regulatory advantages in exchange for precise limits on dimensions, performance and equipment. In parallel, proposals such as the “Car Airbus” – a large EU consortium that develops shared platforms for economical city cars – aim to bring economies of scale back to where they are needed most, in the range under 15-18 thousand euros. It is a paradigm shift that requires courageous political and industrial choices. Because the answer to the initial question – «why have cheap cars disappeared?» – it’s not just “because it costs too much to produce them”. It is also because, in recent years, Europe has accepted the idea that the “right” one should always be bigger, more powerful, more digital.
The real challenge of the next few years, for manufacturers and regulators, will be this: finding a way to bring together safety, decarbonisation and accessibility without leaving those who cannot afford a two-ton SUV stranded.
