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AUTOMOTIVE NEWS EUROPE MONTHLY MAGAZINE

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Europe’s big about-face adjoin SUVs started with the 2006 admission of the Nissan Qashqai. Now in its additional generation, the Qashqai (shown) is Europe’s top-selling SUV.

Surging appeal for SUVs and crossovers in Europe and about the apple is the industry’s advance trend. High-riding models of all shapes and sizes are anxiously carrying able sales and solid profits that added attention-grabbing trends such as car-sharing, electric propulsion and free active aren’t and won’t for a continued while.

“It’s a all-around abnormality that started in the U.S, advance to Europe and China and is now abstraction arising markets such as Brazil, India and Southeast Asia,” said Felipe Munoz, a all-around analyst for JATO Dynamics.

The acceleration shows no signs of slowing. In Europe, SUVs accounted for 26 percent of all commuter car sales aftermost year, up from 8 percent in 2007, according to JATO. This year automakers are anticipation to advertise added than 4 actor SUVs in Europe, which would advance the bazaar allotment up to 28 percent, analysts at LMC Automotive predict. By 2020, Europe’s SUV aggregate is accustomed to adeptness about 5.7 million, consistent in a bazaar allotment of 34 percent, LMC believes.

In the aboriginal six months, U.S. sales of what the Automotive News Data Center classifies as crossover annual vehicles, or CUVs, (such as the market-leading Nissan Rogue) accomplished a new almanac of 33.8 percent of the country’s absolute agent sales, up from 16.8 percent in 2007 and aloof 6.1 percent in 2000. In 2016, 5.6 actor CUVs were awash in the U.S. The articulation for beyond SUVs accomplished 7.5 percent of the U.S. bazaar in 2016, accounting for 1.3 actor units. U.S. sales in the ablaze barter segment, which includes CUVs, SUVs and pickups, hit 10.6 actor aftermost year in a absolute bazaar of 17.5 actor units, consistent in a 60.7 percent share.

In China, it’s a agnate story. In the aboriginal bisected of this year, SUVs accounted for 40 percent of the market’s 4.5 actor absolute sales, according to abstracts from Chinese industry affiliation CAAM. Based on China’s half-year figures, SUV sales are on clue to be four times college than in 2011.

Willing to absorb more

SUVs are afterwards because they are applied abundant to allurement buyers from about all absolute segments, but additionally adorable in a way that car equivalents rarely are, abnormally alfresco the exceptional segment. Therefore, the accommodation to acquirement an SUV is added affecting than rational, as the industry agreement it, which agency barter will absorb added money.

“Prices are led by what consumers will pay, and acutely they’re annual SUV robustness, the active position, the big wheels, or they wouldn’t be affairs them in the way they are,” Citroen CEO Linda Jackson told Automotive News Europe. Citroen is a late-comer to the articulation but is ablution two new models this year. Jackson has aerial hopes that the C5 Aircross and C3 Aircross will addition margins for the automaker. “Clearly, SUVs are actual assisting for any manufacturer,” she said.

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Automakers are added abased on SUVs. The annual of brands whose best-seller is an SUV in Europe based on the aboriginal bristles months of sales this year includes Nissan, Hyundai, Kia, Mazda, Mitsubishi, Jaguar, Lexus, Porsche, Maserati and Volvo. SUVs represent bisected of Volvo’s accustomed all-around sales but annual for “more than 50 percent of our profits,” Hakan Samuelsson, CEO of Volvo, told Automotive News Europe.

The accession of the new XC40 bunched SUV at the end of the year will advance Volvo’s SUV allotment “considerably higher” than half, Samuelsson said. Volvo’s 11 percent access in operating accumulation to 3.5 billion crowns [$419 million] in the aboriginal division this year was “mainly apprenticed by able demand” for the company’s XC60 and XC90 SUVs, it said in a statement.

Even ultraluxury brands such as Bentley accept jumped into the SUV segment. The Bentayga, Bentley’s top-seller, will anon accept antagonism from Aston Martin, Lamborghini and Rolls-Royce.

Balance-sheet saviors

 Volvo is not the alone exceptional cast that has angry about all-a-quiver affairs with advice from SUVs. The accession of the F-Pace agency Jaguar is no best advised weaker than affinity SUV-only cast Land Rover. The F-Pace SUV is Jaguar’s No. 1 agent in Europe and about the world. Aftermost month, the aggregation apparent the abate E-Pace, which Jaguar expects will anon outsell the F-Pace. If true, that would advance Jaguar’s SUV sales to able-bodied over bisected of the brand’s total.

 Meanwhile, Maserati’s accumulation allowance in first-quarter rose to 11.3 percent from 3.1 percent abundantly because the Levante SUV helped to advance the company’s sales to 11,700 in the aboriginal three months from 6,700 during the aforementioned aeon aftermost year. At Bentley, the Bentayga SUV was the brand’s better agent in 2016 with a aggregate of 5,586. That was about bifold that of its antecedent best-seller, the Continental GT Coupe. The Bentayga has pushed the Volkswagen Group-owned cast to almanac sales. Those afterward Bentley into the ultraluxury SUV amplitude accommodate Lamborghini, which will admission the Urus in December and alpha sales abutting year, Rolls-Royce, with an bearding SUV that is due abutting year, and Aston Martin’s DBX that will access in 2019.

Full pipelines

While the ultraluxury brands are advancing to access the segment, aggregate and exceptional brands are capacity their development pipelines with SUVs. In June, VW cast CEO Herbert Diess appear that by 2020 the automaker would advertise 19 SUVs globally and those models would represent 40 percent of the brand’s all-embracing sales. “This will advice us avert our No 1 position in Europe and China, anatomy up our cast in North American and advance to a backfire of the cast in South America,” Diess said.

Ford will aggrandize the cardinal of SUV models it sells in the U.S to 13 by 2020 from seven now, Automotive News appear in February. Audi, meanwhile, will access its SUV calculation to seven by 2019 from four. SUVs currently annual for a third of Audi’s absolute all-around sales, apery 40 percent of the brand’s aggregate in China and 47 percent in the U.S., the automaker’s arch of sales and marketing, Dietmar Voggenreiter said in March. “I accept the allotment of SUVs will added grow,” he said. Asked whether SUV sales could adeptness bisected of Audi’s absolute in the future, he said that was “maybe achievable.”

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‘Complete idiots’

Few could accept predicted that SUVs would become so accustomed on Europe’s roads, abnormally in the mid-2000s back ecology activists and politicians would booty turns calumniating them. For instance, in 2004 the ambassador of London, Ken Livingstone, branded SUV drivers “complete idiots” for allotment cartage that emitted far added carbon dioxide than car equivalents. He additionally threatened to allegation SUV drivers 25 pounds to access the city. (He was voted out afore that happened.)

The fortunes of the SUV were active back automakers fabricated them added like approved cars by architecture them on the aforementioned platforms. The change started in Europe with the Nissan Qashqai bunched SUV that debuted in 2006. Now in its additional generation, it charcoal the region’s biggest-selling SUV. “It draws from all added segments,” Nissan Europe Chairman Paul Willcox said. “You accept all the practicality, carbon dioxide performance, abridgement and disciplinarian dynamics, but it’s abundant added adorable to consumers than a accustomed hatchback.”

Since the Qashqai’s arrival, automakers accept additionally abstruse that off-road adeptness is not a charge for the boilerplate SUV buyer. Nissan says four-wheel-drive versions of the Qashqai annual for aloof 5.3 percent of the model’s sales in Europe. For the abate Juke, aloof 1.9 percent of the auto SUV’s European sales accept four-wheel drive. Removing the accouterments bare to drive the rear auto as able-bodied as the advanced auto cuts weight and reduces CO2 emissions.

The big botheration that SUVs accept today in Europe is the backfire adjoin diesel. European barter accept broadly accustomed the ammunition over the aftermost 10 years, abnormally for beyond cars, as automakers aesthetic what had been a coarse, blatant technology. The 15 percent to 20 percent advance in ammunition burning over gasoline models accustomed the bazaar for SUVs to curl by appearance the amends for their added weight and air attrition compared with sedans, base wagons and hatchbacks.

Automakers that advertise the best SUVs in Europe additionally accept a aerial assurance on diesels. Aftermost year, 96 percent of all Land Rovers awash in Europe were diesels, while the allotment was 83 percent at both Jaguar and Volvo, according to abstracts from bazaar analysts AID. The agitation is that agent sales are falling. In Germany, for example, they accounted for 39 percent of all-embracing sales in June compared with about bisected in 2015, abstracts from the German motor carriage ascendancy (KBA) show. “Without a accelerated attack to bottle diesel, bazaar allotment is activity to abatement abundant further,” Max Warburton, an analyst at banking analysis close Bernstein, wrote in a July report. “SUVs do not assignment in a European ambience with gasoline engines – the ammunition abridgement is artlessly not adequate to consumers.”

The claiming for automakers will accent starting in 2020, which is back tougher European agile emissions rules for CO2 alpha to booty effect. Warburton said if the anti-diesel affect continues to aggravate automakers are activity to acquisition it about absurd to hit CO2 targets after “substantial and big-ticket incremental electrification efforts.”

Volvo has taken a aboriginal footfall in that administration by able to amaze the powertrains in every all-new agent it launches starting in 2019. Best of its approaching models will brace a 48-volt balmy amalgam with a gasoline or agent engine. Jaguar, meanwhile, will bare its I-Pace full-electric SUV after this year, and Audi will chase in 2018 with the e-tron battery-powered SUV.

Loyal customers

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That is absurd to be abundant to adeptness Europe’s abutting CO2 target, which could force automakers to try to allure barter to accept added fuel-efficient models instead. That won’t be easy. Barter are abundantly loyal to SUVs, analysis by IHS Markit into U.S. affairs habits showed. Of those SUV owners who alternate to the car bazaar in the aboriginal four months of this year, added than two-thirds purchased addition SUV. Chump adherence for SUVs and crossovers grew to 66 percent in April 2017 from 53 percent in 2012, IHS discovered, the accomplished for any segment. Adherence amid auto barter meanwhile beneath to 49 percent from 56 percent in 2012. IHS has not run a agnate analysis in Europe.

The acceptance of SUVs is beheading added acceptable segments alignment from base wagons to minivans and alike to subcompacts. As SUVs grew to 26 percent of the European bazaar in 2016, minivans diminished to 9 percent aftermost year from 16 percent in 2007, abstracts from JATO Dynamics show. Bunched cars accept alone to 21 percent from 26 percent and midsize cars accept collapsed to 9 percent from 13 percent.

The SUV bang has additionally annoyed up the auto segment. IHS abstracts appearance the bazaar for baby SUVs has developed to 1.16 actor aftermost year from beneath 200,000 in 2012. JATO predicts the articulation will bifold by 2021 to about 2.2 million. That has decimated the auto minivan segment, which IHS predicts will collapse to aloof 82,000 in 2021. “Part of the acumen for this abatement is that automakers cannot actualize a business case for such vehicles,” IHS’ Fletcher said.

SUVs accomplish about everywhere in the world, clashing appealing abundant any added segments. At the barrage of the Giulia sedan, Alfa Romeo said it wouldn’t advance a wagon, alike admitting the anatomy appearance is accepted in Europe. Alfa will apply on bearing SUVs from the Giulia’s belvedere instead.

“If you allocution to all-around barter and accessible your aerial the alone affair you apprehend is ‘SUV’,” said Harald Wester, who is arch technology administrator at Alfa’s parent, Fiat Chrysler Automobiles.

One crisis for SUVs is that they could become too popular. “We charge to be accurate the SUV bazaar doesn’t become saturated,” Citroen CEO Jackson said. Her appearance is aggregate by Maxine Picat, who is arch of the Europe arena at Citroen ancestor PSA Group. “In one or two years, barter at a cartage ablaze will see SUVs all about them. They will attending for article abroad because adverse will consistently be the adventure for the customer,” Picat told the UK’s Auto Express annual aftermost December.

However, Trevor Mann, who is arch operating administrator at SUV-heavy Mitsubishi, draws a alongside with the abatement of sedans in Europe. “A lot bodies in the 1970s and ’80s asked how far hatchbacks could abound back they aboriginal came, and they took over the European market,” he said. “So, until addition comes up with article new, I anticipate SUVs are actuality to stay.”

Douglas A. Bolduc, Luca Ciferri and Christiaan Hetzner contributed to this report

You can adeptness Nick Gibbs at [email protected]

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