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Automakers flood market with new SUV models following surge in sales

Demand for sport utility vehicles in the United States is booming, but the number of new models vying for a share of that market is growing even faster.


Reuters United States
Updated: 29-03-2018 11:41 IST
Automakers flood market with new SUV models following surge in sales

For an interactive graphic on "The Rise of the SUV" (Image Credit: Wikipedia)

Demand for sport utility vehicles in the United States is booming, but the number of new models vying for a share of that market is growing even faster, threatening the fat profits automakers have enjoyed.

At the New York Auto show this week, automakers will unveil another flock of SUVs ranging from a revamped Toyota RAV4, Toyota Motor Corp's top-selling model in 2017, to flashy new luxury Cadillac and Lincoln SUVs. Premium brands such as Fiat Chrysler Automobiles NV's Maserati that once dealt exclusively in low-slung sports cars are getting into the game.

"I think everyone has read the same tea leaves - right now there seems to be insatiable demand," said General Motors Co's Johan de Nysschen, referring to SUVs and crossovers.

De Nysschen, the head of GM's Cadillac luxury division, spoke to Reuters on Wednesday while standing next to the brand's new XT4 crossover model. "Everyone is going into these segments with compelling new entries," he said, "and that means there are going to be winners and there are going to be losers."

He added: "We aim to be amongst the winners."

According to data from automotive consultancy LMC Automotive, by the year 2023, there will be 90 mainstream SUV and crossover models on the US market, as well as 90 luxury models, compared with the 2017 levels of 65 mainstream SUV and crossover models and 53 luxury models.

Premium automakers like BMW AG and Mercedes Benz and Volkswagen AG's Audi brand are expanding their US sports utility vehicle plants.

US sales of mainstream and luxury SUVs and crossovers alike have more than doubled since 2010 and rose 5 percent and 7 percent, respectively, last year - even though overall industry sales declined 2 percent in 2017.

LMC Automotive forecasts that growth will slow for SUVs and crossovers in 2018 and every year through 2025, even as the number of models on the market is set to rise.

For an interactive graphic on "The Rise of the SUV"

"There are still some legs left to grow in the SUV market, but growth is slowing and will eventually level off," said Jeff Schuster, LMC's senior vice president of forecasting. "This is a bright spot in the market, which is why everyone is flocking to it with the new product."

Over the next few years, millions of nearly new SUV and crossover models will come off lease and return to the market, providing cheap competition for new models.

Around 40 percent of the roughly 4 million nearly new vehicles that will come off lease in 2018 in the United States will be SUVs and crossovers, rising to 44 percent in 2019 and 47 percent in 2020, according to Cox Automotive forecasts.

"Now that you're seeing more SUVs starting to come off lease, that will automatically put pressure on new SUV pricing," said Karl Brauer, executive publisher for automotive research firm Kelley Blue Book (KBB).

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

COUNTRY : United States

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