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Stellantis and Renault fear China's rivals in the small car market, and lobby EU for less rules

Stellantis and Renault fear China's rivals in the small car market, and lobby EU for less rules

Stellantis, a French company, and Renault, a Chinese automaker, are pushing for fewer safety features in small cars, which would make them more affordable.

In the past two months, Stellantis chairman John Elkann has engaged in a public campaign that is rare to try and get the European Union's attention on the issue.

It is a goal to revive the small car segment that was abandoned by Europe's automobile manufacturers because they were unprofitable. They blame this on regulations which make vehicles heavier, larger and more expensive.

Elkann said last week that Europe needed its own version, which could be called "e-car", of Japan's small urban cars with engine and size restrictions and lower insurance and tax costs.

He said that there was no reason for Europe to not have an electric car if Japan, with its kei cars, has 40% of the global market. This is similar to comments made in a recent joint editorial by Renault's de Meo.

Although de Meo will be leaving Renault in July, it is expected that the company will continue to support the proposal.

Renault's Director of Procurement, Partnerships, and Public Affairs, Francois Provost said, "Small vehicles are an area of growth that we cannot and must not ignore at this time."

Chinese rivals have focused their efforts on hybrids and larger EVs to gain market share in Europe. However, smaller EVs will be on the way.

The Dolphin Surf, a vehicle from BYD, China, was launched on the market a month ago. It is priced at under 20,000 Euros ($23,124), and has features like a large rotating touch screen, anti-steam mirrors, and rotatable rear screens.

Comparatively, the Renault 5 is almost 5,000 Euros more expensive when equipped similarly. It's similar, but can accommodate one additional passenger.

Flavien Neuvy is the head of Cetelem's research and auto analyst firm.

He said, "The market has declined by 20% from last year. There isn't enough volume to satisfy everyone and the Chinese will be here soon."

S&P Global estimates that sales of small cars could reach 600,000. This would be an increase of about 20% over last year.

"A LOT of EXCUSES"

The lobbying effort focuses on the EU's General Safety Regulations 2(GSR2) which mandates safety measures such as side-airbags, sensors that detect if a driver falls asleep, lane crossing warnings, and more comprehensive crash tests.

According to a source with knowledge of the lobbying, such requirements and European pollution rules add between 850 euros and 1,400 euro ($983 and $1607) to the price of a vehicle.

Some lobbyists claim that small cars are not subject to the same safety standards as vehicles designed for high-speed collisions.

The European Automobile Manufacturers Association, also known as ACEA, has backed the demand for a new category of vehicle called M0 or e-car.

Lea Zuber, spokesperson for the European Commission, confirmed that it is investigating this matter.

People familiar with the discussion said that it would be difficult to change safety requirements without compromising smaller cars.

It remains to be determined whether models with less regulations can compete with Chinese EVs.

Matthew Avery, Director of Strategic Development at Euro NCAP which tests cars for safety, says the idea that small cars in cities would not be involved with highway accidents is nonsense.

Avery said that the Chinese bring cars to Europe which consistently receive five-star ratings by Euro NCAP. Despite the fact that Euro NCAP's ratings are not legally binding, many consumers still take them into consideration and corporate fleets won't buy vehicles with less than five-star ratings.

Avery stated that a change in safety regulations could result in smaller European cars being rated at two or three stars.

Avery stated that "if they wish, they can despec a vehicle for safety", but added that Euro NCAP tests and ratings of safety will remain the same. "Our job is to simply say that this car is safer than another car," Avery said.

Emmanuel Bret is the deputy head of BYD in France. He says that the company will keep offering small cars which meet all the current EU regulations. Blaming the EU for making the vehicles unaffordable, he claims, is "just a bunch of excuses".

Bret stated, "Let the customer choose."

(source: Reuters)