PSA is preparing for the planned merger with Fiat Chrysler Automobiles by reviewing its model range and rethinking some of its strategies. As a part of the rearrangement, the French manufacturer will most likely say goodbye to its two smallest cars on the European market.

While nothing is confirmed at this point, a report from Automotive News, quoting three Reuters sources, claims the Peugeot 108 and Citroen C1 are facing the chopping block. This decision comes following PSA’s agreement to leave the Czech joint venture with Toyota which manufactures the two minicars alongside the Toyota Aygo.

Gallery: Citroen C1 Furio

"PSA is getting out of both the factory and the A segment business, as it is offered today, and on which manufacturers have arguably lost the most money in Europe," one of the sources told Reuters. "Current projects could be replaced by new ones made possible by the merger with FCA", another source added. "The merger is turning all the cards around, especially when you consider that the A segment, from the very first 500 to the Panda, is inseparable from Fiat history."

All things considered, there are two main reasons for PSA’s departure from the segment. First of all, with the stricter European emissions standards, it’s getting more and more expensive for the automakers to keep selling minicars with combustion engines as they require costly exhaust gas filtration systems to meet the laws. Simply put, minicars are no longer economically profitable.

In addition, with the PSA-FCA merger on the horizon, there will be a significant overlap in the minicar segment with models from the two companies. FCA’s Fiat is a storied nameplate in that class and leaving its 500 and Panda models with no direct rivals from the family is probably the wisest solution.

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