Analysis: Is it the end of sales growth for SUVs?

December 22, 2020

The first signs are emerging that the significant growth of SUV sales across Europe is beginning to level off.

Analysts JATO say the situation for SUVs has ‘changed dramatically’ in 2020 due to the impact of Covid-19.

Although SUVs accounted for around 40 percent of new car sales across Europe during 2020, overall volumes have actually fallen 21 percent year-to-date.

The significant slowdown due to coronavirus is a factor, says JATO – but adds that other sectors such as superminis and family hatchbacks have actually experienced below-average declines.

“Demand [for SUVs] is no longer growing in parallel to new product launches, nor at such a fast pace,” said JATO analyst Felipe Munoz.

There were only two SUVs in November’s top 10 best-selling cars across Europe in November, and none in the top five (see table below).

Supermini and family hatch market share has increased due to new arrivals and a broader selection of electric models.

As electric vehicles start to become more mainstream, the appeal of heavier, less aerodynamic SUVs may start to wane – because of the greater range offered by lighter, more efficient conventional vehicles.

Higher prices could also become a factor. Electric vehicles are already more expensive than regular vehicles, which may make the additional premium for an SUV less viable for car buyers.

SUV success story

SUVs have been a real success story for car manufacturers in recent years. A plethora of new model launches has seen the profitable sector grow from less than 25 percent of European sales in 2016, to more than 40 percent in 2020.

Buyers have been switching to them from lower-margin hatchbacks, estates and MPVs.

Two of Europe’s best-selling model ranges illustrates the higher profits commanded by SUVs: new Peugeot 208 supermini prices start from £17,575 – whereas buyers need to spend £21,030 to get into the cheapest Peugeot 2008 SUV.

New car sales ‘concerning’

More generally, European new car sales remain in the doldrums due to the Covid pandemic.

JATO called the trend ‘concerning… with YTD volume dropping by 26 percent.

‘European consumers registered 10.71 million units between January and November – the lowest YTD figures so far this century.

‘The global pandemic and its impact on mobility has been extremely painful for the automotive industry, indeed more painful than any other economic crisis that has hit Europe over the last two decades.’