French automaker PSA is putting an end to the production of Peugeot and Citroën small city cars, three sources informed Reuters, withdrawing from an increasingly unprofitable market as it begins a strategic review ahead of its planned merger with Fiat Chrysler Automobiles (FCA).
While the French automaker had already agreed to sell its stake in its Czech joint venture with Toyota where the Peugeot 108 and Citroen C1 models are built, the decision to stop the sales of gasoline cars altogether has just been taken, the sources said.
Automakers are reviewing the production of automobiles with combustion engines as they need to fit expensive exhaust filtering systems to satisfy tighter emissions laws. That’s pushing up the cost of some so-called entry-level A segment vehicles to the point where they are hard to justify economically.
“PSA is getting out of both the factory and the A segment business, as it is offered today, and on which manufacturers have arguably lost the most money in Europe,” one of the sources knowledgeable with the matter said.
PSA refused to comment on the future of the two small cars. It said it was evaluating which products would best meet customer expectations in the A segment and cope with European carbon emissions targets.
“This means a reflection with fresh and disruptive ideas,” a spokesman for the French automaker said.
The European Commission is preparing to tighten its emissions limits for vehicles under new proposals designed to slash the bloc’s greenhouse gas output further by 2030.
PSA’s merger project with FCA has also boosted the options available, two of the sources said, as the Italian-U.S. company has no aim of abandoning its small best-selling Panda and 500 models. Both already have hybrid versions and the 500 is available in full electric mode as well.
“Current projects could be replaced by recent ones made possible by the merger with FCA”, another source said according to Reuters. “The merger is turning all the cards around, especially when you consider that the A segment, from the very first 500 to the Panda, is inseparable from Fiat history”.
FCA has not commented on the report.
PSA and FCA intend to finalize their merger in the first quarter of 2021 to create a new company called Stellantis, which will be the fourth-biggest automaker worldwide.
