SUV South America

David Franklin, Analyst, Americas Production

24 September 2020

The SUV begins to make its mark in South America

The Conventional Car has long reigned supreme in South America, consistently making up around 75% of sales and 70% of production in the region. Vehicles like the Chevrolet Onix, Ford KA, Hyundai HB20, Volkswagen Gol and Renault Kwid have dominated the automotive landscape. The familiarity, reliability and affordability of these options have been a recipe for success, such that it would be virtually impossible to travel around any relatively populated area of Brazil without seeing a Chevrolet Onix.

For consumers that require a little more flexibility and utility, the Pickup has been the go-to option, with the Fiat Strada, Toyota Hilux and Volkswagen Saveiro being favourites. The SUV bodystyle, on the other hand, has historically failed to find an audience in the region. From 2003 to 2012, only one SUV, the Ford EcoSport, had managed to crack the top twenty bestselling vehicles in the continent. A lack of locally produced models means that imports face a 35% (Brazil) import tax, in addition to the segment’s already heftier price point, pushing most SUVs beyond consumers’ budgets.

Over the last decade, the global market share of the SUV bodystyle has grown from just 11% in 2009 to an estimated 38% in 2020. During the same timeframe, Conventional Vehicles have dropped from 58% market share to 37% and will likely be surpassed by SUVs for the first time in 2020. Many manufacturers have shifted their focus to SUVs, with some nearly abandoning the Conventional segment altogether. This shift has led to the introduction of a relatively new segment in more polarised areas like South America: the affordable Small SUV. The Jeep Renegade and Honda HR-V SUVs launched in 2015 and were met with success in Brazil. While still more expensive than the traditionally popular sedans and hatchbacks, these vehicles were specifically designed for emerging markets and were competitive enough in price that they gave consumers options.

The success of these models has not gone unnoticed, hence the array of new entries now in local production, with several more in the pipeline. By 2023 virtually every automaker in the region will have localised production of a relatively new Small or Compact SUV – if not both. In total, nearly 20 new SUVs will be built locally, pushing production share for the segment from 17% in 2018 to 33% in 2023.

Despite the notable growth of SUVs, Conventional Vehicles will maintain market leadership, albeit by just a hair. By 2024, South America will boast the second-highest share of SUV sales by region, well behind North America’s nearly 60% share. Although South America may be the last region to truly embrace the SUV, its grip on the public conscience is undeniable.