Skoda is evaluating how it can add cheaper combustion-engined and electric models to its European line-up.

The European city car market has all but evaporated in recent years as petrol models such as the Ford Ka, Peugeot 108 and Skoda's Citigo have been axed.

The lack of replacements has left customers at the most affordable end of the market unserved, forcing them to consider larger superminis such as the Skoda Fabia.

But Skoda is now weighing up an entry into the electric city car class, and it could bolster its ICE offering with the Indian-market Kylaq crossover.

"We have a project where we are looking at putting components together from various very cost-efficient sources," said Skoda CEO Klaus Zellmer.

He said that Skoda was initially involved in the development of sibling company Volkswagen's ID Every1 concept (pictured below), which will evolve into a replacement for the Up next year, but soon left the project.

Zellmer explained: "With the [slower than expected growth] speed of battery-electric vehicles in the market, Skoda is in a better spot to stay with [the petrol) Fabia, Scala and Kamiq, where we have reasonable margins, production capacity and engineering very well accepted in the market.

"Within the bigger Volkswagen Group, we have our colleagues from VW to fish in the [city EV] market that is currently developing. It's not very present and the margins are thin."

To that end, a new entry-level Skoda EV is "nothing that you will have this. decade", said Zellmer, but he did suggest that there's still potential for a model priced below the Fabia, which starts at £21,000.

Zellmer highlighted the Kylaq, which is shorter than the Fabia and costs the equivalent of just £6000 in India, as one potential candidate for European import.

He said: "If you look at the design and technology, fit and finish, we don't know, but that is something we could look into [raising to European standards].

"If you look at the Fabia, if you squeeze everything out to get below €20,000, and if you look at the price of a Kylaq in India, there's a massive gap. There's a business rationale that you can challenge and see whether that makes sense."

The Kylaq is based on an adapted version of the Volkswagen Group's MQB A0 platform for small cars (a cross-brand asset for which Skoda was given responsibility in 2021), which it shares with the slightly larger Kushaq crossover and Slavia saloon in Indian dealerships.