Renault CEO Luca de Meo and Stellantis chairman John Elkann have urged the European Union to implement more favourable rules for small cars as the declining profitability of these cars could lead to plant closures.

In an interview with French newspaper Le Figaro, Elkann and de Meo emphasised that France, Italy, and Spain should spearhead the initiative, given the high demand for smaller, affordable cars in these countries.

However, they did not specify the exact regulations they want to applied to small cars.

de Meo was quoted by Reuters as saying: "What we are asking for is a differentiated regulation for smaller cars. There are too many rules designed for bigger and more expensive cars, which means we can't make smaller cars in acceptable profitability conditions.”

He also noted that Renault and Stellantis, which together hold a 30% market share in Europe, are focused on producing affordable cars for European consumers.

In contrast, premium car manufacturers like BMW, Mercedes, and some Volkswagen brands are more export-oriented, he added.

de Meo said: "(For them), Europe does count, but (their) priority is export. For the last 20 years, their logic has dictated market regulations. And the result is that European rules mean that our cars are ever more complex, ever heavier, ever more expensive, and most people simply can't afford them any more.”

Elkann added: "At this rate, if the trajectory does not change, we will have to make some painful decisions for our production base over the next three years."

Last month, Stellantis reportedly halted production of Leapmotor T03 electric vehicle (EV) at its Tychy plant in Poland.

The company, however, has not specified the reasons behind the decision to halt production of the T03.