Fiat's New 500 and Panda dominate the European City Car sales charts, with growth in most models.

Italy’s economic rebound and the arrival of the refreshed Fiat 500 will help pull minicar sales out of a slump that caused the segment to drop to a five-year low in 2014, analysts at IHS Automotive predict.

European minicar sales fell 32 percent to 1,125,160 million in 2014 compared with 2009, with Italy down 50 percent to 244,642 during the period, IHS figures show.

However, the analyst firm predicts that Europe’s overall minicar sales will rise to about 1.2 million this year and 1.25 million next year because the volume in Italy -- Europe’s No. 1 market for the entry-level models -- is poised to increase to 260,000 this year and 300,000 in 2016.

That is still way below the roughly 500,000 minicars, also known as A-segment cars, that were sold in Italy in 2009, when a government-subsidized car-scrapping program artificially inflated demand. Similar schemes, which were used across Europe to boost sales during the height of the global financial crisis, pushed total minicar volume to 1.65 million five years ago.

Fiat’s dominance

What is expected to drive Italy’s minicar sales rebound is the country’s improving economic climate and the debut of the revised version of the 500, Fiat's higher-end, higher-priced minicar, which is Europe’s best-seller in the segment, according to data from JATO Dynamics.

Fiat also claimed second place in the segment with the more practical, more affordable Panda. European sales of the Panda increased by 11 percent to a little more than 76,000 through May.

The 500 also is a hit outside its home country, ranking as the UK’s best-selling minicar and No. 10 overall after five months, according to figures from the Society of Motor Manufacturers and Traders (SMMT).

Strong demand for the 500 helped make the UK Europe’s No. 2 market for minicars last year, IHS figures show. The UK nearly topped Italy in 2014 as demand rose to 237,138.

Overall UK car sales are being boosted by low interest rates that cut monthly finance figures low enough for buyers like Duncan Watson, a medical equipment salesman from Leighton Buzzard, southern England, who recently chose a new minicar over a second-hand model.

Watson is paying 138 pounds (about 195 euros) a month for a Peugeot 108 that he bought for his daughter, Ellie, on a personal lease from a local dealer. “I only cared about whether I could afford the monthly cost, and tried to get this as low as possible,” he told Automotive News Europe.

The 108’s sister model, the C1, is currently Citroen’s top-selling car in the UK, brand CEO Linda Jackson told Automotive News Europe in June.

Working together

The 108, C1 and Toyota Aygo are the second generation of minicars built at PSA/Peugeot-Citroen and Toyota’s joint venture plant in Kolin, Czech Republic. All three ranked in the bottom half of the European top 10 through May with a combined volume of 97,562.

In April, PSA CEO Carlos Tavares told Reuters he wanted to maintain the French automaker’s minicar arrangement with Toyota, but he indicated an openness to adding partners to further spread costs.

“To make A-segment cars, it‘s better to have the kind of grouping of several [automakers] that are going to share a given investment and then make derivatives out of the common investment,” Tavares said.

Tavares was chief operating officer at PSA’s French rival, Renault, when it teamed up with Daimler to create a joint rear-wheel-drive minicar. The results are the current Renault Twingo, the Smart ForTwo and ForFour, all of which debuted in 2014.

The Twingo was given a more premium styling to better compete with the Fiat 500, a move that has proved to be a success as European sales were up 39 percent to 42,417 in the first five months.

The Twingo’s rise means Renault is poised to retake third place in the segment from the VW Up, which had an 11 percent sales decline in the January to May period.

“New competition in the sector is probably the thing that is harming the Up at the moment,” IHS Automotive principal analyst Ian Fletcher told Automotive News Europe. The Up was launched in late 2011 along with its sister models, the Skoda Citigo and Seat Mii. The minicars are made at VW Group’s factory in Slovakia.

Special models

Of the three, only the Mii has increased sales so far this year, rising 4.4 percent to 10,456. It was helped by growth of the Spanish market and the debut of a new upmarket variant, Seat CEO Juergen Stackmann told journalists during a visit to the UK in July.

The Mii by Mango is a more premium version of the minicar that was created in collaboration with Mango, a Barcelona-based fashion house. The special edition Mii costs 9,480 euros compared with 6,500 euros for an entry-level Mii in Spain.

Stackmann said Seat sold 5,000 units of the model in its first year, with 80 percent being purchased by women. “It was far ahead of our expectations,” he said. “The [Mii’s] average transaction price has gone up tremendously.” IHS expects Spain’s minicar segment to double from a low of 24,558 in 2011 to about 52,000 this year.

The trend for more premium features and higher-end models in the sector also has boosted Opel/Vauxhall’s Adam, which is now available as a three-door hatchback, convertible and as a crossover that is called Adam Rocks.

Sales of the car rose 9 percent to 24,984 in the first five months. In May, Opel added the more practical, less-expensive Karl minicar, which is sold as the Vauxhall Viva in the UK.

“Very few manufacturers have a lineup in the A-B [minicar-subcompact] segment that’s so fresh and able to cater to different subsegments,” Vauxhall Managing Director Tim Tozer told Automotive News Europe. Opel also recently launched the new-generation Corsa subcompact.

Minicars are currently Europe’s third-largest segment and while small SUVs are stealing some sales from the sector, IHS predicts minicar volumes will remain steady at about 1.2 million until 2018. As Citroen CEO Jackson says: “There’s always room for a good cheap small vehicle at the bottom.”

Nick Gibbs

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FIAT Follows Ford in shutting down production of the Panda for 12 days in October.

Fiat will temporarily suspend production at its Pomigliano plant in southern Italy from Oct. 16-27 amid weak demand. The Fiat Panda minicar is built at the factory.

The measure is "necessary because of the slowdown in the market in view of the end of the year," said Giuseppe Terracciano, secretary general for the Fim-Cisl union in Naples. Fiat confirmed the temporary suspension, but declined to give any further comment.

Fiat often uses the state-backed temporary layoff schemes to avoid over-production by keeping workers at home when market demand is lower. Some 1,950 of the plant's 4,500 workers have already been on so-called solidarity contracts since March, under which they agree to work less and are also paid less in exchange for workers retaining their jobs.

Fiat's Italian plants have been under-utilized for years, especially after the auto market in Europe was hit by a six-year slump in sales and is only gradually recovering.

However, Fiat has promised it would reinstate all workers currently on the various layoff schemes as it executes an ambitious five-year investment plan, under which it expects to boost global group sales by 60 percent to 7 million cars and increase net profit fivefold by 2018.

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USA - Scion to make comeback in the US, to avert further sales declines.

After slow sales and a few failed marketing campaigns, Scion is trying to make a comeback in the U.S. It will start off by replacing three of its five cars over a two-year period starting in 2015, reports Automotive News.

The brand will still keep its focus on compact and subcompact vehicles, but it may also expand to other segments. “Would we be interested in other body styles? The answer is always yes. We may mix things up a bit as we find a new direction for the brand," said Scion Vice President Doug Murtha.

Scion said it is considering small hatchbacks and even cute-utes. Sales are down 12 percent for the brand during the first quarter of the year. Numbers for the iQ minicar have been particularly dismal. And frankly, we haven't been too impressed with the rest of Scion's lineup, save the FR-S sports car. Models like the xB and xD haven't seen redesigns in seven long years.

In order to spur sales, Scion will switch gears with its marketing strategy. A year ago, Scion considered moving upmarket by appealing to younger professionals, but now it is returning to its original strategy of trying to attract first-time buyers. Keeping prices low should help, but we hope Scion introduces a wider array of technology features to stay competitive with this market.

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New Ford KA five door concept could be sold in Europe !

Ford Motor may sell in Europe the five-door Ka minicar unveiled by company executives in Brazil.

A Ford of Europe spokesman said the automaker has no made a decision on whether to offer the vehicle in Europe but "it's on the shelf for Ford of Europe to draw down if it decides to."

Top Ford executives, including Chairman Bill Ford, were at the company's Camacari plant in Brazil on Wednesday to showcase a concept version of the global Ka five-door hatchback, which will be introduced in Brazil next year.

Eventually, Ford will bring the global Ka to other emerging markets, including China, where more families are amassing the wealth needed to buy their first vehicle.

Speaking to reporters last week in Detroit, Joe Hinrichs, Ford's president of the Americas, said the Ka Concept is "one of the most important product programs in the company in the last few years."

In Europe Ford currently sells the second-generation Ka three-door, launched in 2008. The Ka is based on the Fiat 500 and is built in the Italian automaker's factory in Tychy, Poland, alongside the 500. Ten-month sales of the Ka in Europe fell 18 percent to 40,000, according to market researchers JATO Dynamics.

Last year Ford of Europe CEO Stephen Odell told Automotive New Europe there was no rush to replace the three-door Ka. "Our contract with Fiat goes well into the second half of this decade, so we are not in a hurry," he said.

Premium look

Designed and built in Brazil, the Ka five-door concept is smaller and less expensive than a Ford Fiesta subcompact. The Ka carries Ford's new global design language, which Ford officials believe give their vehicles a premium look. "It makes it look like a much more expensive vehicle for much less," Ford designer Ehab Kavod said. "It's the smallest car we do, but when you look at it, it exudes premium."

Ford said the concept is a "strong precursor" to the production car, offering class-leading fuel economy and a host of useful technologies, including a a docking station to accommodate a smart phone, allowing the driver to view navigation and other features.

Ford expects global sales of small, low-cost cars to grow 35 percent between 2012 and 2017, outpacing the expected 12 percent rise for the industry as a whole. Ford said 44 percent of the market for "sub-B" cars will be in South Asia and South America.

The automaker now feeds this market with its current-generation Ka and Figo, which are built on older, locally tailored vehicle platforms that Ford is increasingly avoiding.

The Ka Concept unveiled in Brazil is part of Ford CEO Alan Mulally's One Ford strategy of building global models that can be sold in countries around the world. Ford is working to commonize its vehicles around the world on a series of core platforms. In doing so, the carmaker hopes to save money on engineering, purchasing commodities and manufacturing.

The Ka Concept follows the Ford EcoSport subcompact SUV that was developed in Brazil for global markets. As well as Brazil, the EcoSport also goes into production in India from next year with sales in Europe starting in the summer.

Ford's first global vehicle under Mulally was the Fiesta in 2008, but developing a global car as small and cheap as the Ka has been a challenge. Ford studied Maruti Suzuki India, Hyundai and Kia and their approach to the global market for small cars, Ford Chief Financial Officer Bob Shanks said.

Bradford Wernle, Reuters and Bloomberg contributed to this report

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