Market Insight: SUV dominance continues

CLEAR lines of buyer preference continue to put the bias on SUVs with the latest VFACTS data showing new-vehicle sales stabilising in February but passenger cars still playing second fiddle.

Overall vehicle sales were down a mere 1.5 per cent year-to-date but that is attributed more to weak supply tugging against the strong demand.

In SUV sales, the healthy small SUV category pulled back in February (compared with February 2021) as supply was held up, particularly with the highly favoured Korean and Japanese brands that were pinched primarily by that old chestnut, semiconductor shortages.

By contrast, the medium SUV and large SUV segments boosted sales in February over the previous year’s corresponding month.

In keeping with the trend, passenger cars continued to slide on lacklustre consumer demand and also on production issues caused by component shortages that slowed supply.

But what is clear is the ongoing strength of the SUV sector. What is causing this isn’t as cut and dried as people buying a high-rising wagon.

The popularity is triggered by an avalanche of new models to the sector. More models are added each year and some companies – Nissan and Mitsubishi, for example – barely acknowledge the passenger-car buyer.

In many cases, buyers have little choice. They are also becoming conditioned to the SUV silhouette, placing it as important when selecting a new vehicle, and to the “go anywhere” family-oriented message of SUV (and pseudo-SUV) manufacturers.

Many vehicles now sold as SUVs are incapable of being correctly defined as part of the genre that was first popularised 10 or 15 years ago.

Increasing numbers of SUVs are two-wheel drive – so cannot “go anywhere” – and at the smaller end of the spectrum have as much cabin room as a rival hatchback as well as similar ground clearance.

All this has swept the SUV genre into the limelight and diluted the traditional passenger car sector.

Small passenger cars, looking at February YTD data from 2016 to 2022, show sales have plunged 63 per cent – from 35,970 in the first two months of 2016 to 13,365 in the same period of 2022.

At the same time, the small SUV category has risen 22 per cent.

Much of the SUV interest is in the medium SUVs, where sales in the same seven-year period are up 11.3 per cent and the medium passenger car segment has slid 52 per cent.

The picture is more dramatic in the large SUV versus large passenger car sectors, not because of the surge in SUV sales but of the plunge in car sales.

Much of this is attributed to buyer preference – which aided and abetted the closure of local big-car brands Ford, Holden and Toyota – clearly pushing towards the SUVs.

The large passenger car category slumped 85.3 per cent in that seven-year period, mainly on the exit of the locally made cars but also a wealth of product that suited the same buyers, including the Hyundai Santa Fe, Toyota’s Prado and Kluger, and the Isuzu MU-X.

However, there was some push-back by the medium car group with the well-received Hyundai Sonata selling 187 units in the first two months of 2022 and the Peugeot 508 finding 38 buyers while Volkswagen sold 106 units of the Passat.

Most of the weight of buyer interest in SUVs has been in the light, small and medium categories, with the large and upper large SUV segments not reporting the gains expected of the genre. 

Sales of large SUVs are down 15 per cent on the 2016 February YTD data while the upper large category is off 37 per cent, hit by slow product availability.

This is also partly in line with the February overall vehicle sales fall of 1.5 per cent but also a subtle consumer move out of bigger SUVs and into the medium SUV class.