The European automotive industry is currently facing a structural challenge, particularly for the small and affordable cars. These have been progressively abandoned by Original Equipment Manufacturers (OEMs), mainly due to rising production costs, stringent regulatory requirements, and limited profit margins. At the same time, global competition—driven by both legacy manufacturers and new entrants, particularly from Asia has reshaped the competitive landscape, highlighting Europe’s vulnerability in maintaining industrial leadership. The thesis investigates the potential long-term strategies available to the European Union to stimulate a recovery of small and affordable cars production, with a focus on regulatory and policy-driven interventions. The thesis also investigates case studies of international alternatives, analyzing how different contexts have managed similar challenges such as the Japanese kei cars, Chinese small cars, and the European quadricycle market.