By Jamie Barrie T he sport-utility vehicle is the new standard for the automobile industry from auto makers, accessories providers to parts and repair. North Americans are buying more SUVs than they did sedans in 2015 and that trend is continuing. In North America the Compact SUVs represent the largest vehicle segment with respect to sales. This is not limited to the Compact SUV as Luxury SUVs are now outselling luxury passenger cars. These trends are expected to continue however, this trend sets us on head on collision course with the need to curb climate change by drastically reducing consumption of fossil fuels. Auto makers have introduced many innovations in technologies to achieve greater fuel- economy goals with all vehicles however; SUVs can’t help be less fuel efficient conventional cars of comparable size. Taller bodies increase air resistance and sturdier construction adds weight, while AWD systems further add weight and friction all causing for higher fuel consumption. How to reconcile this apparent standoff between consumer wants and societal needs? One part of the answer comes frommarket-intelligence company LMC Automotive. Speaking at 2015 TalkAUTO Canada, LMC’s Jeff Shuster predicted that most of the SUV growth between 2014 and 2020 will be in small and compact SUVs especially premium ones. Shuster also forecasts 70 new or redesigned SUVs coming to market between 2017 and 2020. Already this year, we’ve seen first-time SUV entries from Jaguar, Bentley andMaserati. Meanwhile, Porsche Canada CEO, Alex- ander Pollich told the Globe Auto Summit in February that SUVs account for 68 per cent of Porsche sales worldwide, and 70 per cent in Canada.
Is Jaguar concerned the F-Pace might cannibalize sales from sister brand Land Rover? “The Jaguar F-Pace is designed for a totally dif- ferent customer than Land Rover,” says Sam Pirillo, sales director at JLR Canada. “It is trying to go after the performance aspect and the driving dynamics. Land Rover is traditionally known for off-road and versatility, so we think there is room for both.” Also speaking at the Globe Auto Summit, Toyota Canada CEO Larry Hutchinson echoed most other execs in the room when he said, “The consumer creates demand in the market. They’re going to make a decision based on their wants, demands and budget... And they have spoken very clearly that they are moving toward SUVs.” Most consumers didn’t know they wanted an SUV until Ford created one, when the first Explorer hit the market for auto buyers in the early 1990s. SUVs where marketed as the cool minivan starting as shift from the dominance of the minivan and wagon segment had on the auto industry and we have not looked back and why would we. SUVs are profitable for auto makers and most share much of their architecture with passenger cars. Either way, any extra cost of building an SUV is less than the price premium it can command; that’s especially true in the growing premium SUV segment. Industry trends are showing that going smaller with SUVs is where we will see growth in this segment and the reduced size and increased inno- vation will help auto makers set targets for fuel efficiency in their SUV offerings, but it does not seem like that is a concern for buyers right now as it seems drivers are more concerned with increased functionality than fuel economy especially with fuel prices at their current levels.
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SPOTLIGHT ON BUSINESS • JUNE 2016
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