As others exit, Toyota scents opportunity in Europe’s city car segment, says GlobalData

Following the news that Toyota has confirmed it will produce a third model on its TNGA-B vehicle platform, aimed at Europe’s A-segment (city cars);

David Leggett, Automotive Analyst at GlobalData, a leading data and analytics company, offers his view:

“The very compact city car niche in Europe had looked all but dead, but Toyota’s move suggests it isn’t necessarily so. Moreover, it’s a reminder that there’s still life in the internal combustion engine (ICE), even as electrification gathers pace.

“Toyota’s strategy with this new car hinges on keeping cost down via scale economies spread over three models on the TNGA-B vehicle platform. It can do that by sharing major component systems with the B-segment Yaris range.

“The A-segment class of very compact city cars presents a dilemma for car companies in Europe as they have to hit very tough average CO2 emissions standards – which involves fitting expensive equipment – and still keep the price point low on such entry-level cars, which makes it difficult to turn a profit on them.

“However, as several manufacturers have exited the segment (for example, Ford dropped the Ka+ and Opel/Vauxhall axed the Karl/Viva), Toyota has seen an opportunity open up. A little ironically though, it will exploit the city car market in Europe with an internal combustion engine powered car to keep the city car’s price point as low as possible.

“Toyota’s low European car sales CO2 emissions average also creates room for Toyota to go with a combustion engine solution in this case because its heavy weighting of hybrids on other model ranges keeps its overall average down.”

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