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For most of us, our car is one of our most prized possessions - and despite there being so many different makes and models, we all still have our favourites.
In today’s video, we will explore the current industry-favorite - the sports utility vehicle, or SUV, and understand why it's become so popular in recent years.
We’re all familiar with humble sedans like the Honda Accord or Ford Fusion, which are popular for daily commutes.
But in recent years, people's favourite sedans are being replaced by the big and bold SUVs.
Currently, SUVs and pickup trucks form 70% of the auto market and sales of sedans is continuously dropping.
Back in 2012, one out of five cars sold was a sedan model; now it's hardly one out of ten.
On the other hand, sales of SUVs have skyrocketed, reaching an all time high of 29.77 million worldwide in 2018.
SUVs have also reduced drastically in price over recent years.
Today, many SUVs are priced comparable to competing sedans, with models sold below the $20,000 price point.
The lower price, greater degree of comfort, off-road capability and more trunk space have all helped the SUV’s popularity to soar.
And that big rig fever is spreading rapidly around the world, with these models becoming an instant favourite amongst the millennials.
As a demographic, Millennials enjoy being outdoors and carry everything with them from paddleboards to camera equipment, in their thirst for adventure.
For them, SUVs are the perfect vehicle - that not only handles the daily commute - but also acts an instrument for outdoor activities.
Now that we know why people are loving SUVs again, let's try to understand how the auto industry is dealing with this switch.
For automakers, the shift in consumer taste for buying bigger vehicles is more than welcomed.
Selling SUVs is way more profitable than selling electric vehicles or even midsize sedans,
and that's why the major Detroit automakers - Ford, General Motors(GM) and Fiat Chrysler - have all jumped on the SUV bandwagon.
For a company like Ford, selling a sub-compact SUV like its EcoSport, means $4500 in profits, compared to compact cars like the Focus,
which brings in about $2500 in profit.
With this in mind, it’s not overly surprising that Ford has announced it will stop selling most of its midsize sedans and concentrate on only two models
it's Mustang and the new Focus Active crossover - which means an end for the Fiesta, Fusion, Taurus and C-Max.
GM is also undertaking a major restructuring, to capitalize on the booming SUV trend.
The company has laid off 14,000 employees from its manufacturing plants in North America that were focused on making the Chevrolet Impala and Chevrolet Cruze.
GM claims this restructuring will save them $6 billion in cash, and help to focus its sales only on SUVs and pickup trucks.
While Fiat Chrysler has already ceased production of its Chrysler 200 and Dodge Dart models - the only two cars it made in the U.S.,
and plans to focus only on its SUV oriented Ram and Jeep brands.
What’s more, the company is planning to electrify its new line of vehicles and offer new options like a midsize Ram pickup,
a three-row Grand Cherokee and a Maserati midsize crossover.
As larger vehicles catch on in popularity around the world, luxury automakers are joining the ranks of sport utility vehicles.
Premium carmakers like Mercedes Benz, BMW AG, and Volkswagen AG’s Audi brand, are all expanding their American SUV plants,
and experts believe there will be 90 luxury SUV models in the market to choose from by 2023.
BMW launched its X7 model, which is the largest SUV offered by the brand to date; interestingly enough, it’s already sold out until the end of this year.
Right now, SUV sales makeup a 40% share of new cars launched by the brand.
Now, while climate activists criticize gas-guzzling SUVs, Audi is making an attempt to go green with its electric SUV named E-Tron.
Hybrid and electric SUVs seems to be a go-to for German automakers, in their attempt to abide by stringent EU emission standards,
while also making the most of rising SUV trend.
Because demand fuels innovation, battery technology has improved massively in recent years, allowing SUVs to drive roughly 300 miles on a single charge,
bringing them up to par with their gasoline-fuelled counterparts.
And the silver lining of an SUV’s higher ground clearance is automakers being able to stack batteries on the underside.
Even sports car manufacturer Porsche has joined the greener SUV race by launching its hybrid Cayenne SUV, which boasts 340 horsepower, and a six cylinder engine.
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The biggest challenge SUV manufacturers face, is criticism from environmental activists and working to meet global emission standards.
As compared to sedans or hatchbacks, SUVs are bulky and less aerodynamic, which leads them to consume more fuel.
So, booming SUV sales also means an increase in carbon emissions.
Advancements in technology can help make hybrid or electric SUVs more environment-friendly, but research & development isn’t cheap,
which could drive market prices up, and sales down.
Furthermore, the EU is forcing a shift to lower vehicle emissions, by imposing a 37.5% cut in carbon dioxide pollution in the next decade.
These targets won't be met unless automakers offer greener alternatives to these so-called “climate killers”.
Powerful electric SUVs may be a solution to the stringent emission norms,
but research suggests they carry a 40% greater risk of collision or rollover, as compared to other car types.
The bulky design of SUVs may better protect passengers inside, but its larger mass creates an increased danger for pedestrians, and passengers in the smaller vehicles.
Designed primarily for the wide American highways, the SUV is far more impractical for countries in Europe, where road-space is limited.
Nevertheless, the impressive sales volumes of SUVs have encouraged the entire automobile industry to switch to bigger cars,
but rising competition between automakers also threatens individual profits made by these new models.
By 2023, it’s expected there will be 270 SUV models on the market, so there’s bound to be some winners…. And, some losers.
According to Audi’s interim CEO Bram Shot, the SUV boom isn’t over yet.
Even if fuel prices rise in the future, automakers don't foresee trends swinging back to smaller cars;
instead, they would be more likely to switch to more compact or fuel-efficient SUVs.
While tech companies like Uber and Lyft change the way we move around, shrinking the overall market of traditional automakers,
it makes total sense for manufacturers to push SUVs to meet their bottom line.
But ultimately, consumers need to decide if they really need these not-so-environment-friendly vehicles, marketed as lifestyle choices.
And Aluxers we, of course, know we have a large international audience which makes us curious
What do you think of the rising popularity of SUVs
Let us know in the comments.
And, of course, for sticking with us until the end... what does that mean?!
Curious to know which is the best selling SUV at the moment?
The Ford F-150 is so far the best selling SUV of 2019, with 448,398 units sold this year in the US alone.
The F-150 range starts with a base price of $28,000 going all the way up to $53,205 for the off-road oriented Raptor model.
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