Another small car has disappeared from the market.

Skoda Australia has discontinued its underperforming Scala, even though we have long praised it as an underrated option that should have found more buyers.

The hatch joins other discontinued rivals including the Ford Focus, Holden Astra, Mitsubishi Lancer and Renault Megane.

Small car sales keep falling in Australia as buyers shift to SUVs, which often amount to little more than raised hatchbacks. New Chinese brands such as BYD and MG have added fresh options to the segment lately.

I asked the CarExpert team which small car they would choose for under $40,000 before on-road costs, covering petrol, hybrid and electric models from the MG 4 EV Urban to the Toyota Corolla.

The winner of this year's CarExpert Choice Awards for Best Affordable Small Car appeared often in the answers, along with strong support for one of the finalists.

Marton Pettendy, Managing Editor

Kia K4

With $40,000 available, I would select the Kia K4. It earned our Best Affordable Small Car award at the 2026 CarExpert Choice awards for good reason.

The K4 ranks among the newest entries here, yet its starting price sits at just $32,090 plus on-roads for both hatch and sedan. Three further variants of each style stay under $40,000, while only the top GT-Line exceeds the limit at $43,790 plus on-roads.

The 1.6-litre turbo-petrol unit delivers stronger performance than the 2.0 MPI engine in lower grades, but every K4 offers stylish looks inside and out, current safety and infotainment features, generous standard equipment, composed ride and handling, plus a seven-year warranty unmatched by most competitors.

Buyers seeking a conventional small car from a known brand can also consider the Mazda 3, Hyundai i30 and Volkswagen Golf, though only the i30 matches the K4 on overall value.

James Wong, Marketplace Editor

Mazda 3 G20 Evolve Sedan

The Corolla feels too ordinary for my taste, as does the i30 Sedan. The Mazda 3 Sedan in G20 Evolve form with the optional Vision Technology Package at $2000 fits easily under $40,000 drive-away.

The Mazda stands out with its premium interior and exterior finish, avoiding the basic fleet appearance of its rivals. It also delivers engaging drive dynamics and a responsive 2.0-litre petrol engine, while the sedan body provides a practical boot.

Other strong options include the MG 4 as an affordable EV introduction and the Volkswagen Golf 110TSI Life at $37,990 drive-away, though I prefer not to choose the older 1.4 TSI with its eight-speed automatic.

William Stopford, News Editor

Hyundai i30 Sedan Premium or MG 4

The turbocharged 2.5-litre all-wheel drive Mazda 3 would be ideal if offered locally. The Hyundai i30 Sedan Hybrid in Premium trim would also suit, and the Kia K4 GT-Line would fit if priced below $40,000 before on-roads.

The Kia K4 GT-Line remains my top pick in the segment overall. Despite limited front headroom and bold styling, it provides excellent ride comfort, strong performance with a smooth automatic, a modern cabin with intuitive tech and ample equipment.

At $43,790 plus on-roads it misses the budget, so below $40,000 I would consider a K4 with the 2.0-litre engine and CVT, or the same powertrain in the Hyundai i30 Sedan Premium at $39,500 plus on-roads.

A new generation i30 approaches, and its cabin trails the K4 while its styling lacks the Mazda 3 sedan's appeal, yet it carries more equipment than the K4 Sport+.

Although I am not yet prepared for an EV, affordable models continue to grow. The MG 4, now from $39,990 drive-away, remains my favourite at this price. A recent update improved its interior, and I favour the rear-wheel drive version for its balanced handling over the front-wheel drive Urban model.

Ben Zachariah, Road Test Editor

Mazda 3 G25 Evolve SP sedan

Shoppers seeking small cars under $40,000 face plenty of strong choices amid ongoing segment competition.

The Kia K4 impressed me, yet my shortlist would include the Toyota Corolla, Volkswagen Golf, Hyundai i30 Sedan and Mazda 3.

Answers like this shift with mood or the day, but today I would pick a Mazda 3 G25 Evolve SP sedan in Jet Black Mica. Its 139kW and 252Nm from the 2.5-litre engine plus sporty handling would edge out the Hyundai or Toyota, while the higher Evolve SP grade feels more appealing than the base Golf.

I also appreciate that Mazda still offers the 3 as a sedan, setting it apart, with chrome accents enhancing the black paint. A manual option would complete the package.

Damion Smy, Deputy News Editor

Mazda 3 Evolve SP hatch

I would choose a Mazda 3 Evolve SP hatch. Its design remains distinctive after seven years, paired with a refined cabin and a responsive, characterful 2.5-litre engine. Sharp handling and strong reliability combine style with practicality better than anything else at this price.

Josh Nevett, Deputy Marketplace Editor

Kia K4 Sport+ Hatch

Most cars in this class excel in one or two areas, but the K4 delivers across the board.

It handles and rides superbly, returns strong fuel economy, presents well as a hatch, includes all the expected features for 2026 and carries a seven-year warranty with capped-price servicing over the same term.

The Sport+ at $39,090 plus on-roads also offers strong value.

Sean Lander, Head of Video

Mazda 3

We recently had one in the Melbourne office and the Mazda 3 surprised me. It is older now, its technology lacks flair with no true touchscreen, and it offers no electrification.

That simplicity is exactly why I liked it. It felt like a straightforward car rather than an overcomplicated experiment.

Drawbacks exist. The engine lacks power and the gearing feels slow next to newer rivals. The cabin is very dark and pricing seems high currently. Yet it looks sharp, drives without frustration and offers reasonable rear space.

It is also a Mazda, with a wide dealer network, solid warranty and proven reliability from its straightforward engineering. A touchscreen would improve it further.

Max Davies, Marketplace Journalist

Mazda 3 G25 GT Hatch

The Scala's departure disappoints me, though it is not unexpected. Fewer small cars means reduced choice.

The Mazda 3 remains an excellent option. Its interior ages gracefully as rivals adopt screen-heavy designs. It looks premium beyond its price, feels sporty to drive and stays practical.

Among variants, the 2.5-litre G25 engine stands out over the G20, which feels underpowered for daily use. The G25 Evolve SP stays under $40,000, though the GT at $40,410 before on-roads would be my preference if budget allows.