Stellantis’ Elkann urges adoption of smaller, cheaper, Japanese-style ‘kei’ cars

By Giulio Piovaccari

TURIN, Italy (Reuters) -Europe needs to develop smaller and cheaper vehicles in the style of Japan's so-called 'kei cars', Stellantis Chairman John Elkann said on Thursday, as high prices, which he blamed on regulation in the region, weigh on consumer demand.

Kei cars are urban vehicles traditionally sold in Japan with size and engine restrictions, enjoying lower tax and insurance costs. Elkann said the European equivalent could be called the "e car".

"There's no reason why if Japan has a kei car, which is 40% of the market, Europe should not have an e car," he said at an Automotive News Europe conference in the Italian city of Turin, the home of Fiat, now part of Stellantis.

Elkann and Renault CEO Luca de Meo last month urged the European Union to lighten the regulatory burden for smaller cars by introducing different rules for models of varying sizes.

For example, some safety features such as sensors detecting whether a driver is falling asleep or an SOS button are required on cars from the smallest ones up to larger SUVs, with a disproportionate impact on the cost of vehicles used mainly for short city journeys.

Speaking on Thursday, Elkann noted that in 2019 there were 49 models sold in Europe for less than 15,000 euros ($17,400), versus just one now. In 2019 a million cars were sold below that price level compared to fewer than 100,000 now, he added. 

"If you actually look at the (cars') cost increase... that has primarily been driven by regulation," Elkann said.

"If you actually look at our engineers, more than 25% just work on compliance. So no value added."

Fiat has a tradition of making small, affordable cars, from the "Topolino" of pre-war years to the famous "600" and "500" of the 1950s and 1960s, which helped Italians to take to the roads and turned Fiat into a European giant. 

Elkann is still steering Stellantis, as newly-appointed CEO Antonio Filosa formally takes the job later this month. 

Filosa, an Italian national, led Fiat Chrysler and Stellantis' operations in South America, before being appointed head of the automaker's North American market last year.

Elkann said Filosa was the right choice in an automotive industry that is shifting from global to "multi-regional".

"The experience that Antonio had running Argentina, running Brazil, running South America, and recently running North America is very much in phase with how the world is going between regulations, tariffs, and how you ultimately navigate that constructively with political forces," he said. 

($1 = 0.8625 euros)

(Reporting by Giulio Piovaccari, writing by Claudia Cristoferi and Giulio Piovaccari, editing Alvise Armellini and Keith Weir)