Many European cars hold icon status around the world, and while Australia is undeniably a ute and SUV market, there are still people who want something smaller and more premium.
Despite that, we’ve reported multiple times in recent months that some European brands are ending production of their smallest cars. This includes news the Mercedes-Benz A-Class will be discontinued like the B-Class was previously, and confirmation the Audi A1 won’t be renewed beyond its current generation.
There are still some key players in the compact Euro market, though most have German roots. This is because the Volkswagen Group owns at least four brands that fall into this space in Australia (VW, Skoda, Cupra and Audi), while the BMW Group controls two (BMW and Mini).
The outlier is Peugeot, which is the only remaining brand to sell small French cars in Australia after Renault discontinued its Clio and Megane, and Citroen departed the local market entirely in 2024.
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To show our appreciation for the best European small cars (not SUVs) still on sale in Australia, we asked the CarExpert team which one they would buy given the opportunity.
For simplicity, we’ve nominated models from the light and small passenger car segments, as defined by VFACTS, and excluded the niche Fiat and Abarth models in the micro-car segment.
With that in mind, the options were:
Let us know which car you’d pick in the comments below.
James Wong: Volkswagen Polo 85TSI Style
It would be very easy to spend an unimaginable amount of dream cash on some of the higher-end options here, but I believe the true essence of compact European motoring is best represented by the current Volkswagen Polo Style.
$37,990 drive-away is getting up there for a light vehicle, but these days what isn’t expensive? And the latest Polo is as big as a Mk5 or Mk6 Golf, with plenty of rear seat and boot space for the odd occasion you need to transport more than just yourself.
The 1.0-litre turbo-petrol engine is a great balance of torque and efficiency, and in Style guise you get the same digitised cabin and high-end driver assistance systems seen in much more expensive VW models – including the excellent Travel Assist semi-autonomous highway driving function as well as trick Matrix LED headlights with adaptive high-beam, which are still fairly rare at this end of the market.
My younger sister drives a base Polo with the lesser engine tune, and I thoroughly enjoy driving that around when she lets me.
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MORE: Everything Volkswagen Polo
Sean Lander: Skoda Scala
I’m not really a huge fan of any of these vehicles; the size of them puts me off and, to be honest, most come with a hefty price tag for such small cars.
That’s why I like the Skoda Scala. It’s the twin to the Volkswagen Golf but without the inflated price and the need to constantly talk to James about being a Golf owner – did you folks at home know that James owns a Golf…?
It’s a sharp-looking little car and starts at just over $32,000 drive-away, which is a relative bargain these days. It’s packed with tech, but very little in the way of annoying safety aids.
Skoda vehicles just seem to quietly do their job. The ergonomics are good, they’re really fuel efficient, I like the infotainment system and, even though these are pretty German nowadays, my Czech grandfather would still approve.
If only the Fiesta was still around…
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MORE: Everything Skoda Scala
Josh Nevett: Audi RS3
I feel a bit dirty picking one of the most expensive cars in this segment, but that won’t stop me.
Audi has finetuned the RS3 recipe over more than a decade, and that long-term development shines through in the latest iteration. The RS3 is nothing short of a junior supercar, packing a characterful 2.5-litre five-cylinder turbocharged petrol engine producing 294kW and 500Nm. It’ll do 0-100km/h in just 3.8 seconds.
At the same time, it’s practical enough to handle daily duties and remain comfortable over long journeys. So are some of the competitors – the BMW M135 xDrive and Volkswagen Golf R, to name a couple – but neither possess the charm and capability of the RS3, which sounds like a baby R8 and goes like one too.
You’ll have to pay circa-$100k for the updated RS3 when it arrives Down Under later this year, so it’s far from cheap. However, when you consider Mercedes-AMG is killing the A45 S and BMW wants almost as much money for the 233kW four-cylinder M135, it could just be worth it…
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MORE: Everything Audi RS3
William Stopford: Skoda Scala
I’ve said it before and I’ll say it again: it’s a damn shame the Skoda Scala doesn’t sell better in Australia.
Handsomely styled, well packaged and pleasant to drive, the Scala is an appealing alternative to rival small cars from Japanese and Korean brands.
Astonishingly, Skoda has delivered just 43 examples of its small hatch this year, less than half as many deliveries as for the smaller Fabia.
Until recently, Skoda had these two vehicles priced quite closely to each other, but the Fabia has now received a price cut. Perhaps it was the Scala that needed one, or at least some more advertising, because nobody seems to realise it bloody exists!
If I was spending more money on a small European car, there are plenty of options within the Volkswagen Group. A Volkswagen Golf GTI is a classic choice, though the Cupra Leon is prettier and there’s an update coming this year bringing a longer-range plug-in hybrid option.
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MORE: Everything Skoda Scala
Marton Pettendy: BMW M135 xDrive
As Will and Sean say, the Skoda Scala is hugely underrated and offers great value even compared to its Fabia and VW Polo and Golf sister models, so it would be my pick if I was in the market for an affordable small European car.
But if money were no object, I’d go for the BMW M135 xDrive since it’s the closest the Bavarian brand gets to offering an actual ‘M1’ hot hatch, and it packs a big punch with a 233kW/400Nm 2.0-litre turbo four driving all four wheels, combined with the best front/all-wheel drive chassis BMW has ever produced.
It’s not cheap at $83,600 plus on-roads, but it looks a lot more special than the upcoming Audi RS3 facelift, which will also be much pricier, and it’s loads more fun to drive than the understeery Mercedes-AMG A45, which costs $120k and is destined to become an orphan.
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MORE: Everything BMW 1 Series
Damion Smy: Volkswagen Golf R
Getting down to the final car here is a process of elimination.
I like BMW product, but let’s just say I prefer the look of pretty much all its rivals – even going backwards. That includes the not-quite-pretty Peugeot 308 – but when it comes to the crunch, would I actually do it? No, despite owning a Pug with 410,000km on it.
The Mini is a contender, but I’m not as sold on its looks as its age-defying predecessors – you can see I’m a believer in loving the sight of the car you walk up to everyday.
That leaves the Cupras, but I’d prefer the Skodas if I’m to have a VW Group product – Cupra still feels like an odd start-up to me and I’m not ready for that. With money no object, an RS3 would be more alluring, but I really liked the now-dropped sedan…
Then again, I like understatement, and a Polo is a tad too small for me (although more than enough in reality), so I’d prefer an A-Class– or Golf-sized vehicle.
This leads me to a Golf R, which I initially thought would be a bland, easy choice – but that can also mean it’s a tad unassuming as it’s lost in a sea of hatchbacks out there and isn’t as awkward looking as its German rivals.
A hi-po Golf would be my ‘value’ pick (even at $71k), but it’d have to make way for a well-specced A45 AMG – with its unrivalled blend of looks, firepower and sense of occasion – if I was crazy enough to spend $122k on a C-segment hatch.
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MORE: Everything Volkswagen Golf
Max Davies: BMW M135 xDrive
After a fair few hours behind the wheel including several spirited drives, I can say the M135 is up there with the best you can buy in not only the small Euro car segment, but also the hot hatch market as a whole.
Aesthetics aside, there aren’t many other small cars that can handle quite as well as the M135 can. To me, that’s its biggest selling point.
It benefits from adaptive suspension, and there’s quite a difference in the way it rides, steers and puts its power to the ground in comfort and sport modes.
In the latter, it feels like you can take every bend at twice the speed because it’s just so well planted, giving you that extra bit of something that reminds you the car is alive.
It’s rapid too, and that all-wheel drive system means you’ll struggle to run into trouble on the tarmac.
The current M135 may not be what the (rear-drive) 1 Series once was, which probably hurts perceptions a little given how BMW fans yearn for those earlier versions.
At $83,600 before on-roads it’s fairly expensive too, but that’s not as difficult to digest as it was when the car was first launched. Even the Toyota GR Corolla is now much closer in price, and the M135 was never that much more expensive than a Honda Civic Type R – which makes BMW’s interior and tech advantage worth the premium.
It has the advantage over its European rivals on price too, yet retains some classic BMW character that remains unique among its peers.
Of course, it is a relatively niche performance car, so if I had to go for something more affordable it’d probably be the Skoda Fabia – a thoroughly enjoyable small hatch.
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MORE: Everything BMW 1 Series