New arrivals from Volvo, Jaguar, BMW propel premium compact SUV sector

October 9, 2018 09:58 CET

Europe’s relatively new premium compact SUV category is experiencing a breakthrough year in terms of sales as new models drive customers into the segment.

New launches by Volvo, Jaguar and BMW have helped to increase European sales to the point that they will surpass half a million this year for the first time, analyst firm LMC Automotive predicts.

The rapid pace of growth will eventually push sales past 700,000 by 2021, LMC forecasts, meaning the segment will have more than doubled from 2016’s figure of just below 350,000.

“The segment has really taken off this year and it’s set to enjoy further significant growth,” David Oakley, EMEA analyst for LMC said. There is one big reason. “New model activity is driving this pace,” he said.

The segment was created by the BMW X1 almost 10 years ago and the model continues to dominate sales, with 62,287 units in the first half, according to figures from market analyst JATO Dynamics. But threatening its crown are a slew of new-model launches in the sector.

The Volvo XC40, Jaguar E-Pace and DS 7 Crossback went on sale this year to give their brands a presence in the sector for the first time. The arrival of the BMW X2, meanwhile, gives the German brand a sportier variant and strengthens its sector leadership this year.

Later this year, the third-placed Audi Q3 will be replaced by an all-new model. The Q3 is key to Audi’s lineup after becoming its No. 3-seller globally behind the Q5 midsize SUV and A4 midsize car.

The premium compact SUV segment’s No. 6-seller, the Range Rover Evoque, will be replaced next year and another newcomer, the Lexus UX, goes on sale this month. Further into the future, Mercedes is preparing to replace its GLA following the launch of the new A-class compact hatchback on which the SUV will be based.

Alfa Romeo will enter the segment for the first time before 2022, the company said earlier this year. By that time, Alfa estimates the segment will account for 12 percent of the worldwide premium market.

The BMW X1 maintained its commanding lead in Europe’s premium compact SUV segment during the first half.

Desirable derivatives

 Automakers entered the segment with relatively conventional body styles, but now they are also looking to offer a range of derivatives to take advantage of consumers’ seemingly inexhaustible appetite for compact SUVs.

 Audi was first to double up with the smaller, more angular Q2, and BMW followed with the sportier X2. Audi has said it will also launch a sporty model called the Q4. The Q4 will be based on the looks of the coupe-inspired TT Offroad concept from the 2014 Beijing auto show.

Mercedes is expected to go the other way and launch a more upright model aimed at people who want to take the SUV off-road. Some in the automotive media dubbed the unnamed model the GLB after prototypes were photographed in August.


PSA’s DS brand meanwhile will offer a smaller model below the DS 7, the DS 3 Crossback, starting in the spring 2019.

Automakers like the segment because they can apply premium looks and technology to cars based on relatively cheap platforms.

The forthcoming Audi Q3 switches to parent Volkswagen Group’s MQB platform for the first time, while the BMW X1 and X2 use the UKL front-wheel-drive platform that is shared with the Countryman from sister brand Mini.

The new Countryman rose to fifth place during the first half, passing the Evoque, with a 40 percent surge in sales. Jaguar Land Rover is also maximizing its platform as both the E-Pace and the new Evoque use a continuation of the outgoing Evoque’s steel architecture. Meanwhile, the Lexus UX is based on the Toyota New Global Architecture (TNGA).

Electric switch

Automakers’ premium compact SUV platforms are also increasingly being adjusted to allow electrified drivetrains. The new-generation Evoque, which is expected to be launched at the Los Angeles auto show in November, will come with a plug-in hybrid variant as will the future Alfa Romeo compact SUV, the company said. The Mini Countryman is already available as a plug-in hybrid, which accounted for 14 percent of the car’s sales in the first half, according to figures from Swedish-based analyst firm EagleAID.

“Electric and hybrid technologies will further boost growth as premium companies launch smaller versions of electric SUVs,” Felipe Munoz, global analyst for JATO Dynamics, said. The Lexus UX is the first to offer Toyota’s new 176-hp full-hybrid powertrain mated to a 2.0-liter gasoline.


Diesels currently still dominate, accounting for 65 percent of the segment in the first half. But the powertrain is becoming less popular in line with its decline elsewhere and gasoline’s share climbed to 35 percent, up from 24 percent in the first half of last year. In terms of drivetrain, 51 percent of models sold come with front-wheel drive, just edging out four-wheel-drive models. The split is exactly the same as the previous year.

Currently, the biggest market for the segment in Europe is the UK, where sales rose 22 percent to 44,001 in the first half despite the market’s overall drop in volume, figures from JATO Dynamics showed. The increase also came amid falling sales of the aging, UK-built Evoque, proving that demand for cars in the segment could remain strong in the country after it leaves the European Union next year.

Germany was the next biggest market in terms of size, followed by Italy, France and Spain. In terms of market share, Luxembourg was top, at 4.6 percent of sales in the first half, followed by Switzerland at 3.7 percent and Belgium at 3.4 percent. The UK was fourth.

The only premium automaker not able to capitalize on the segment’s growth was Infiniti. Sales of the Q30/QX30, which is based on the Mercedes GLA, fell to less than 2,000 in the first half. Infiniti says it will continue selling the UK-built models despite their poor performance. For all other premium brands, however, the premium compact SUV sector remains the one with the most potential for growth.

AUTOMOTIVE NEWS EUROPE MONTHLY MAGAZINE

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You can reach Nick Gibbs at ngibbs@crain.com.

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