Global Microcar Market Research Report: Forecast (2023-2028)

Market Definition

Microcars are small-compact vehicles with less than 700cc engine capacity as well as a length of not more than 3 meters. The vehicles usually come in all two, three, and four doors models as per the seating capacity. Cars with a smaller size & displacement have been a lucrative medium of transportation among various developed & developing countries.

Market Insights & Analysis: Global Microcar Market (2023-28)

The Global Microcar market is projected to grow at a CAGR of around 9.24% during the forecast period, i.e., 2023-28. Some factors that have attributed to the growth are a smaller design, which makes it easier to maneuver the vehicle in tightly constrained traffic & lean roads, better fuel efficiency, inexpensive pricing, attractive designs, etc. With the rapid increase in the prices of petrol & diesel due to volatility in the international crude oil prices, many traditional as well as first-time car owners gravitated towards the small-compact-sized cars that could be a better alternative to large vehicles for single-person mobility in city traffic conditions.

Furthermore, the rise of nuclear families that require smaller cars for mobility solutions has also assisted the adoption of these cars among a wide range of customers. The growing environmental consciousness among consumers & the demand for these cars in low- to middle-income economies has led to higher demand, with the affordability factor also playing a crucial role. In many countries, the government restricts the purchase of large-sized cars by imposing additional taxes. This increases the overall price of certain-length cars, discouraging consumers to opt for larger vehicles & shifting toward smaller alternatives.

Hence, with the rise of urban population & increased traffic conditions in several fast developing economies, consumers are expected to shift towards these cars in order to save time & cost of transportation, thereby promoting market growth in the forecast years.

Global Microcar Market Key Driver:

Affordability Playing a Crucial Role in the Adoption of Microcars - Price is one of the prime aspects for a large number of customers before making a purchase decision for cars, especially in developing & under-developed economies. With the high upfront cost involved in owning a car, customers are looking for alternatives available within the existing spectrum of options. Generally, among all the varieties of passenger cars, the hatchback is the best alternative for price-sensitive customers.

Many consumers in low-income economies look for substitutes that are not extremely costly compared to a two-wheeler & also provide safety & security. In light of this, several potential leaders are expanding their operations in low-income economies to offer smaller alternatives & cost-effective cars to customers. As a result, many companies have introduced their models to cater to the growing market. For instance,

• In 2022, Dutch start-up Quad Mobility announced the launch of its USD6,500 squad solar electric microcar. According to the company, it would provide solar electric power to customers within an affordable range.

With the focus on the affordability of these cars in price-sensitive economies, it is anticipated that more options under these cars segment would be available for the customers, thereby enhancing market growth in the forecast years.

Global Microcar Market Possible Restraint:

Lack of Consumer Awareness & Acceptance to Impede the Growth - The primary challenge for the market is the lack of consumer awareness & acceptance. Microcars are still a relatively new concept in several parts of the world, and consumers may be hesitant to purchase these vehicles due to concerns over safety, reliability, and performance. They are also a relatively newer segment with a limited number of sales & retail outlet availability in many of the regions, owing to which the customers are also hesitant to opt for these cars.

Globally, there is a trend observed among car buyers to opt for SUVs or sub-compact SUVs for their additional space, high-ground clearance, additional power, etc. This has resulted in limiting the demand & growth for other categories, such as sedans, hatchbacks, etc. Moreover, the adoption of smaller cars with limited space is a new concept for many customers, which would be a notable factor that could impede the penetration of these cars within many geographies.

Global Microcar Market Growth Opportunity:

Enhanced Demand from Shared Mobility Solution Providers - Shared mobility services is a fast-growing sector worldwide, with a focus on providing rental services to customers in mobility solutions. As owning a large fleet of full-sized cars not only increases the fixed cost of the services provider but also the cost premium for the customers as well, so many of the shared mobility providers have started opting for these cars to cater to the rapidly growing market of rental car services & reducing the cost of transportation through the usage of light-weight these cars.

Many companies, such as Squad, Micro Car Rental Private Limited, etc., are some of the prominent names in shared mobility solutions, which are including these cars. With the rise in the demand for rental cars, the need for the electric microcar category is expected to grow, further promoting the expansion of the market during 2023-2028.

Global Microcar Market Key Trend:

Electric Microcar Category to Promote the Growth Prospect in the Global Market - Electric cars offer greater fuel efficiency & reduce the cost of transportation due to lower prices of electricity compared to conventional gasoline & diesel-based options. Hence, this has attracted a large number of customers to opt for the electric car, with lower day-to-day running costs. In line with this, the microcar category has also adopted a similar path with the expanding offering of electric-powered these cars, which are power efficient & provide higher torque compared to their conventional engine counterparts, more suited to be used in tightly packed traffic conditions. For instance,

• In 2022, a Joint venture formed by Nissan Motor Co. and Mitsubishi Motor Co. launched their all-new Kei EV or microcar electric vehicle in Japan. According to the companies, the model would be targeted towards the small car category in Japan, which is a highly growing market.

Further, with the growing number of electric models, it is anticipated that consumers would be more inclined towards adopting electric alternatives, therefore providing the existing market players the immense potential for expansion in the coming years.

Global Microcar Market (2023-28): Segmentation Analysis

The Global Microcar Market study of MarkNtel Advisors evaluates & highlights the major trends & influencing factors in each segment & includes predictions for the period 2023–2028 at the global, regional, and national levels. Based on the Propulsion, and Drive Type the market has been further classified as:

Based on Propulsion:

• Internal Propulsion Engine
  • 100-250cc
  • 251-500cc
  • 501-700cc
• Electric

Of all, Electric engines have grabbed a considerable market share in the Global Microcar market during the historical period. With the growing inclination of customers towards opting for environment-friendly solutions as well as the lucrative lower operating cost of electric vehicles. The companies are focusing more on offering these cars models with electric drivetrain systems. This includes Smart cars (Mercedes-Benz), Microlino from Micromobility Solutions, etc., which have offered a full range of these cars under the electric drivetrain systems in Europe.

Furthermore, these cars are smaller in size with the focus on city limits transportation due to the lesser fuel range available for commuting. This has also lured the manufacturing companies to focus on electric power train systems to be integrated into the microcars to provide higher torque for pickup in city traffic conditions.

Based on Drive Type:

• Four-wheeled
• Two-wheeled & Three-wheeled

Here, the Four-wheeled Microcar category has held the major share in the market. The factors attributed to the growth are consumers’ perceptions, towards the adoption of four-wheeled cars. These cars also offer better traction on roads as well as offer better weight distribution to the vehicle, thereby improving the driver's confidence. Additionally, four-wheeled platforms also offer more internal space within the car, due to which a large number of customers opt for the respective category. Many companies are providing four-wheeled microcars, which would be crucial to the expansion market in the forthcoming period

Global Microcar Market Regional Projection

Geographically, the market expands across:

• North America
• South America
• Europe
• The Middle East & Africa
• Asia-Pacific

Of all, the Asia-Pacific region is expected to hold a major market share in the market due to low-income & price-sensitive customers as well as the higher adoption of microcars that has been observed in the past few years. The region has grabbed a major market share due to countries such as Japan, China, India, Indonesia, South Korea, etc., exhibiting a higher adoption of these cars with the ease of mobility in urban traffic environments as well as affordability factor coming into the picture. With a large population falling under the middle to lower middle-class income, customers inclining towards smaller cars have extensively grown.

Followed by Asia-Pacific, Europe is expected to hold a sizeable share of the market. Due to the high population density in the European region, the available roads to commute within the city have stressed the need for smaller cars. The enhanced need for smaller cars has been one of the paramount reasons for the higher adoption of these cars in the European region.

Global Microcar Industry Recent Developments 

• 2022: PMV Electric launched its first electric microcar in India with a price of USD6,000. According to the company it has already received pre-orders for 6,000 models.
• 2022: Citroen launched its electric microcar AMI in the UK with a total price of USD9,300. The car is with the length of 2.41 meters & is packed with a 5.5 kWh battery pack with an 8bhp electric motor.

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