Sales of SUVS Cause Automakers to Inundate Market with New Models

Demand for SUVs across the U.S. is strong but the selection of new models attempting to grab a share of that sector is even stronger threatening big profits that automakers have been enjoying.

At this week’s New York Auto Show, automakers are set to unveil another group of new SUVs that range from Toyota’s revamped RAV4, the top-selling Toyota model in 2017, to new flashy luxury Lincoln and Cadillac SUVs.

Premium brands like the NV’s Maserati from Fiat Chrysler, which at one time dealt exclusively in sports cars that were known for being low-slung, have entered the SUV arena.

General Motors’ Johan de Nysschen said he believes everyone has been reading the same set of tea leaves as there seems to be an insatiable demand, referring to crossovers and SUVs.

De Nysschen is the Cadillac luxury division head for GM and on Wednesday stood near the brand’s most recent crossover model the new XT4. He added that every brand was entering these segments with new, compelling entries and that only means there would be winners and losers.

According to just released data from LMC Automotive an automotive consultancy, by 2023 there is expected to be 90 different mainstream crossover and SUV models in just the U.S. market alone, with another 90 in the luxury model sector, in comparison with the levels of today that includes 65 mainstream crossover and SUV models and 53 in the luxury segment.

Automakers in the premium sector such as BMW, Mercedes Benz as well as Volkswagen’s Audi brand have expanded their plants for making SUVs in the U.S.

Sales in the U.S. of mainstream as well as luxury crossovers and SUVs alike have doubled over the last eight years and increased 5% and 7% respectively in just the last year, even though sales overall in the industry dropped 2% during 2017.

The auto consultancy said it has forecasted that growth would slow for the crossover and SUVs during 2018 and each year through the end of 2025, even as the different models available in the market are expected to grow in size.

Over the upcoming few years millions of close to new crossover and SUV models will be ending leases and returning to the market, providing less expensive competition for all the new models.

Close to 40% of the nearly 4 million close to new vehicles that will be coming off leases in 2018 in the U.S. will be crossover and SUVs, rising to over 44% for 2018 and 47% during 2020.

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