Peugeot is weighing a return to the ultra-compact city car market—potentially with a successor to the discontinued 108 model—contingent on new EU regulations designed to make such vehicles financially viable again.
The End of an Era, and a Possible Return
For three decades, Peugeot offered a continuous line of city cars, starting with the 106 in 1991, followed by the 107, 108, and most recently the 108, which was closely related to the Toyota Aygo and Citroën C1. However, about four years ago, Peugeot ended production of the 108 as increased regulations and rising production costs made it unprofitable. This decision mirrored similar exits from the segment by Ford, Vauxhall, Skoda, and Citroën, effectively ending a decades-long trend in affordable microcars.
New EU Framework Could Change Everything
Peugeot CEO Alain Favey has signaled a potential reversal of this trend. Speaking to Autocar, Favey stated that Peugeot sold over a million cars in the A-segment “in the not so distant past,” and that “if there is this new category that allows us to produce smaller cars at a profit, then obviously there will be a space for Peugeot in that area.”
The key to this possible revival lies in a proposed EU “E-Car” category. This framework aims to reduce the regulatory and technological burdens on small car production, making them profitable again. Currently, stringent safety standards, emission requirements, and mandatory features drive up costs, squeezing margins on low-priced vehicles. The new category would alleviate these pressures, potentially allowing manufacturers to build affordable city cars without sacrificing profitability.
Why This Matters
The shift in EU regulations is a direct response to the growing recognition that ultra-compact cars serve an important niche in urban mobility. These vehicles offer affordability and efficiency, particularly for younger drivers and city dwellers who don’t require large vehicles. The earlier withdrawal of these cars from the market raised concerns about access to affordable transportation, especially in densely populated areas.
If the EU framework is approved, Peugeot and other automakers could re-enter this segment, offering consumers a wider range of choices in the small car market. The potential return of the 108’s successor would signal a broader trend towards renewed investment in compact, accessible vehicles.
The viability of microcars now rests on the ability of lawmakers to strike a balance between safety and affordability, ensuring that these vehicles remain a practical option for a significant segment of the population.
