The gift that keeps on giving

Once again, the SUV segment has outperformed the general market when it comes to overall European Passenger Vehicle sales

Sammy Chan, Senior Analyst

21 October 2021

The popularity of the SUV bodystyle with the European public is certainly no industry secret, and the continued love affair between the two has allowed SUV sales to thrive, even in the harshest of conditions.

Recovering from a very low pandemic-affected base in 2020, overall European Passenger Vehicle sales have improved so far this year, rising by 11% in the eight months to August. And, once again, the SUV segment has outperformed the general market, improving by 23% over the same period. Conversely, Conventional (hatchback, MPV, wagon) sales were left behind, with an uptick of just 6%. 

This has resulted in a market-share gain of 4 percentage points for the SUV segment, while the Conventional segment has lost over 2 percentage points in the same timeframe.Growth in market share for the SUV bodystyle is by no means a new phenomenon, but what we have observed this year is a unique set of circumstances created by the microchip shortage and its severe impact on the vehicle market. The scarcity of these components has highlighted one of the key factors driving SUV growth – in a word, profitability. 

SUVs inherently command a higher price point than hatchbacks in the same size segment, while costing the manufacturer a relatively similar build price. In a situation where microchips are scarce and certain models need to be prioritised, it is no surprise that a manufacturer may opt to ensure that SUVs can continue rolling off the production line. Larger SUVs are particularly profitable, as illustrated by the fact that D-segment models grew by a whopping 31% in the January-August 2021 period, compared with growth of 11% for the overall market.

With the microchip shortage set to continue blighting vehicle sales for the remainder of this year and into 2022, we expect larger (more profitable) models to outperform the industry average. This is likely to reflect well on the SUV segment – not that it needed any extra wind in its sails.