Fiat Chrysler Automobiles (FCA) has announced that it is considering quitting Europe’s minicar market, which may come as a surprise seeing as it’s the leader for that particular segment. The decision, according to Automotive News Europe, is due to increasing development costs to make these small cars meet tougher emissions limits.

FCA boss Mike Manley said the company plans to shift Fiat’s minicar customers to the B-segment range of subcompact cars, although he did not specify the timeline. “In the very near future, you will see us refocus on this higher-volume, higher-margin segment, and that will involve a move away from the minicar segment,” Manley told analysts at the company’s recent third-quarter earnings call.

This in effect is a reversion from the FCA’s decision to discontinue the Punto in 2018. The Punto had been the automaker’s best-selling car in Europe for a long time, but the late and former FCA CEO Sergio Marchionne said its sales were not large enough to build a successor profitably.

Moving forward, Fiat aims to shift its loyal pool of minicar customers to the B-segment and keep existing Punto owners as well. However, Manley did not reveal what cars will populate the more profitable segment, and likewise with the fate of the 500 and Panda.

The 500 and Panda fared terribly in crash safety ratings, which is also why they could be on the way out

It’s unclear as yet if FCA will completely abandon its minicar line-up. JATO Dynamics analyst Felipe Munoz shares the same doubt, and told the publication that Fiat may choose to improve the equipment level and pricing of the 500 and Panda if they want to play in the small car segment. Otherwise, Fiat could also replicate the 500 hatchback formula with a slightly bigger car, Munoz added.

In a more positive light, the merger between FCA and the PSA Group will also give Fiat access to the French giant’s Common Modular Platform, which underpins models such as the Peugeot 208 and Opel Corsa. The platform also allows full electric models to be offered alongside their internal combustion engine counterparts. A full electric Fiat 500 with a slightly bigger footprint does sound like an interesting prospect, we think, and EVs typically cost less to produce.

Currently, Ford and Opel have already announced their departure from Europe’s minicar segment. Both brands have stopped importing the Ka+, Adam, and Karl to the market, whereas Volkswagen executives have said that it plans to drop combustion-engine versions of the Up! minicar in Europe.