The European automotive market appears to be following the North American trend in the sales of sports utility and crossover vehicles. Demand for these types of vehicles has surged recently, and experts point to the high ride height and safety features as the driving factors behind increased consumer appetite for utility vehicles.
As of right now, the data shows that SUVs made up about 26% of all passenger vehicle sales last year, which is about 8% higher than it was a decade ago. The forecast for the coming year is calling for another 4 million sales that will push the segment to account for 28% of the market. If this trend continues, some expect the segment to account for as much as 35% by 2020. In the United States, the crossover market accounts for about 34% of all sales, a 20% jump from over a decade ago. The same trends are holding true in China as the exploding utility segment now accounts for almost 40% of new sales.
Why is this happening? Well, most will highlight the fact that this segment can steal buyers from traditional vehicle segments as consumers want the practicality and range of a crossover or SUV versus the more narrow bands offered in other segments. Experts also point out that many consumers are not willing to keep waiting for the electric equivalents to show up and are making important buying choices now given the current market conditions.
Not that most manufacturers mind, as this segment is a highly profitable one automakers with a robust lineup of SUVs crossovers that sell for far more than the equivalent sedan or hatchback. Research indicates that SUV and crossover vehicles are more of an emotional purchase (with the illusion of versatility, adventure, and capability) and buyers are more open to spending. This purchasing behavior (for most buyers) is adding to the automaker’s bottom lines – with Volvo saying that SUVs account for 50% of the company’s profits. As much as environmentalists may not like it, it looks like these are here to stay for a while.