Fiat to axe city-cars

Italian car-maker Fiat is, bewilderingly, preparing to abandon the city-car market that has kept it alive for the last 30 years.

Just merged with France’s PSA Groupe, FCA’s Fiat is preparing to stick the knife into its baby cars because they cost too much to develop, no longer deliver CO2 advantages and deliver small profits.

"In the very near future you will see us refocus on this higher-volume, higher-margin segment, and that will involve a move away from the minicar segment,” FCA CEO Mike Manley told analysts last week.

It would be an astonishing move from Fiat -- which earlier this year committed to new versions of both the Fiat 500, including an electric version, and Panda – with more than half of its total European sales coming from city-cars like the Panda and the 500.

Add in the Lancia Ypsilon (which is built on the Panda’s platform) and it pushes the small-car split even higher, to around 320,000 cars so far this year.

The Fiat Panda and 500 lock out the top two spots in Europe’s mini-car market segment, with a combined third of the segment’s 604,000 total.

Each of them sells about double the third most popular micro-car in Europe, the Toyota Aygo.

Abandoning the segment would leave the Aygo in the lead with just over 51,000 sales in the first half of this year, from Renault’s Twingo and Volkswagen’s expensive Up.

Like Fiat, Volkswagen has confirmed plans to kill off the Up at the end of its production cycle.

Fiat’s PSA partners have two players in the segment, with the Peugeot 108 in eighth place at 31,349 for the first half of the year and the Citroen C1 in 10th with just 28,993 sales.

Frighteningly, Fiat doesn’t have a single car in the top 10 for the light-car segment (the next segment upstream), which is dominated by the Renault Clio (185,517 sales) and the Volkswagen Polo (146,344).

Peugeot’s 208 ranked fourth in the segment in the first half of the year, with 124,730 sales, while Citroen’s small offering, the C3, languished in seventh with 118,799.

Both the much-loved, five-door Panda and the more style-oriented three-door 500 are getting old, with the 500 in particular need of a tickle.

It has had a facelift, but it was launched 12 years ago. Essentially a more stylish body on an upgraded Panda chassis, the 500 has seen sales in Europe finally began to fall this year, dropping nine percent to 100,150 in the first half of the year.

The evergreen Panda – the latest version of which was launched in 2012 -- saw its sales climb 15 per cent to 105,534 in the first half of the year.

PSA, which controls Peugeot, Citroen and DS, is not fond of small city-cars and its CEO Carlos Tavares is about to become the CEO of the merged PSA-FCA entity. Manley’s future is uncertain in the new group.

In Australia, where the micro-car segment is down more than 13 per cent to October this year, accounting for less than 6000 sales, the Kia Picanto leads the way with an 80 per cent share, followed by the Fiat 500 (600 sales, 10%) and Mitsubishi Mirage (500, 8.5%).

There are no other micro-car players Down Under, were the Panda, Holden Spark and Suzuki Celerio were all axed last year.