The Shocking Reason Cheap New Cars Have Vanished

Once upon a time, you could walk into a showroom and buy a brand-new, small, petrol car without taking out a second mortgage. That era is quietly being legislated out of existence

Not that long ago, buying a brand-new small car felt like a perfectly sensible, attainable thing to do. You walked into a dealership, pointed at a modest little hatchback, signed a few forms, and drove away knowing you hadn’t just committed yourself to years of financial regret. Cars like the Ford Fiesta became staples of British life for a reason. They were affordable, simple, easy to live with, and perfectly suited to everyday motoring. They weren’t glamorous, but they were democratic. They worked. And then, almost without ceremony, they disappeared.

The Fiesta is gone. The price of cars like the Fiat Panda has crept towards £20,000. The entry-level petrol car, once the backbone of the market, is becoming an endangered species. So what happened?

Contrary to popular belief, it’s not because buyers stopped wanting small cars. If anything, in an age of rising living costs, high fuel prices, and congested cities, the appeal of a simple, compact, affordable car has never been stronger.

The real reason lies elsewhere.

GSR2: When “Safety” Stops Being Cheap

At the heart of this shift is something called GSR2, short for General Safety Regulation Phase 2.

This is a Europe-wide set of vehicle safety rules that has been rolling in from 2024, with further requirements applying to new models and registrations through to 2026. The important word here is cumulative. Each layer adds cost, complexity, and weight, and none of it is optional.

Under GSR2, every new car sold must now include a long list of advanced systems. Driver attention and distraction monitoring. Intelligent Speed Assistance. Lane keeping systems. Advanced emergency braking. Road sign recognition. Event Data Recorders, effectively a black box for your car.

None of these systems are inherently bad. Some of them genuinely improve safety. The problem is not the idea, it’s the application.

On a £60,000 or £70,000 luxury car, these systems are a rounding error. They disappear into the price list alongside metallic paint and upgraded leather. On a £15,000 city car, they are catastrophic.

Cameras, sensors, processors, software integration, calibration, validation, compliance testing. It all adds up. Industry estimates put the cost at several thousand pounds per vehicle. On a car that already operates on wafer-thin margins, that extra cost doesn’t just reduce profit. It obliterates it.

Manufacturers are left with a simple choice. Jack the price up dramatically, or walk away.

That’s why a car many people assume should cost around £14,000 now starts closer to £19,000. That’s not inflation alone. That’s regulation embedded into the dashboard.

When Even Car Bosses Admit It’s Gone Too Far

What makes this story especially telling is that manufacturers are now saying the quiet part out loud.

Olivier François, the boss of Fiat, has publicly criticised the way small cars are being overburdened with technology designed for much larger, faster vehicles. His argument is refreshingly blunt.

Most city cars spend their lives doing 20 or 30 miles an hour. School runs. Shopping trips. Urban traffic. Yet they are being forced to carry systems intended for heavy cars travelling at motorway speeds.

At one point, Fiat even floated the idea of limiting small cars to around 118 kilometres per hour, roughly 73 miles an hour, simply to reduce complexity and cost. Not because customers demanded it. Not because the car couldn’t go faster. But because regulation has made simplicity unaffordable.

When manufacturers start discussing making cars slower just to keep them cheap, you know something fundamental has gone wrong.

The ZEV Mandate: The Other Squeeze

GSR2 is only half the story. The second pressure point is the UK’s ZEV mandate, which requires manufacturers to sell a rising percentage of zero-emission vehicles every year. Miss those targets, and the financial penalties are severe.

Now consider what happens when a manufacturer sells lots of cheap petrol cars. Their overall EV percentage drops. They get punished. So the boardroom logic becomes painfully obvious. Kill the cheap petrol car. Push buyers towards more expensive models. Protect the balance sheet.

This is why petrol superminis quietly vanish while compact SUVs and electric crossovers proliferate. It’s not always about what buyers want. It’s about what the spreadsheet demands.

The Death of Democratic Motoring

This isn’t an argument against safety. Or emissions. Or progress. It’s an argument about unintended consequences.

We are losing something important. The idea that an average person can walk into a showroom and buy a brand-new car without financial gymnastics. The idea that new cars are not just for the wealthy, the leveraged, or the company car crowd.

When the CEO of a major manufacturer says his primary ambition is simply to get a new small car back under €15,000, that should ring alarm bells across the industry. Affordable motoring isn’t dying because people don’t want it. It’s being regulated out of existence.

And if we’re not careful, the cheap new car won’t just vanish from showrooms. It will end up behind a rope in a museum, labelled: From a time when ordinary people could still afford a new car.

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