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Why city cars like the Kia Rio, Toyota Yaris, Mazda2, MG3, Volkswagen Polo and Suzuki Baleno may be headed to no man's land

The Kia Rio is currently the second most popular model in the Light segment.

Prices are rising while sales are declining – the future of city cars doesn’t look bright. That’s not news, because this has been a trend for some time, but now one of the biggest supporters of smaller passenger cars has admitted the writing is on the wall.

While many brands have abandoned mainstream city cars (notably Ford has dropped the Fiesta, and Hyundai no longer offers the Getz and Accent) and others have dramatically increased entry-level prices (most recently the Toyota Yaris and Mazda2), Kia has been a staunch supporter of the Micro, Light and Small segments.

The South Korean brand has offered three city cars in recent years – the Picanto, Rio and Cerato – allowing it to pick up sales as the market gets less competitive. It has therefore allowed the brand to grow its overall market share and rise up the sales charts. 

And Kia Australia chief operating officer Damien Meredith is confident there is still room to grow.

“We believe there’s still volume and growth in these segments,” he told CarsGuide.

But the numbers don’t lie, and sales in the Micro, Light and Small segments have been in freefall this year. Just look at the numbers below from the Federal Chamber of Automotive Industries.

2019 sales2020 sales (YTD to October)
Micro - down 16.8%Micro - down 30.6%
Light - down 17.3%Light - down 43.7%
Small - down 18%Small - down 28.8%

Which is why Mr Meredith, despite his belief that there’s still some room to grow as the likes of the Yaris and Mazda2 continue to be priced out of many first new car buyer’s reach, admits the end of the road is on the horizon for the likes of the Picanto and Rio.

“[The city-car market] might be a desert by the middle of the decade,” he said.

  • 2021 Toyota Yaris 2021 Toyota Yaris
  • 2020 Mazda2 2020 Mazda2

Mr Meredith believes carmakers will continue to prioritize Light and Small SUVs, such as Kia’s upcoming Stonic and recently released Seltos, over developing new city cars.

Again, the numbers paint the picture quite clearly. Even in a market down 18.8 per cent year-to-date, sales of Light SUVs are up by 4.1 per cent and Small SUVs are only down 6.0 per cent (which is well ahead of the market).

And they are continuing to arrive as more emphasis is placed on them. Volkswagen has added both the T-Cross and T-Roc this year, Peugeot just launched the new 2008 and Toyota has introduced the new Yaris Cross.