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FULL ARTICLE | EDITORIAL 
SUV Love – Drives world’s auto sales
Peter Schmidt | Editor

Published: Fri, 03rd June 2016 10:24:11 GMT
 

FCA Jeep Plant Brazil Jeep Renegade production


Open quote signLove affairs are rarely rational. 

Being in love can change our perceptions about everything, warp and distort realities. 

Around the world, this mystical state of mind has already gripped hundreds of millions of consumers. 

First appearing in the US, this infectious bug has spread not only across the Atlantic, but has now also spread to China where it is flourishing. 

Its infectious powers are such that even consumers in recession-gripped markets such as Russia and Brazil for instance now appear to have lost their sense of rationality. 

Yes, today’s world is gripped by the SUV-Crossover bug. 

And judged by very latest car sales trends, and almost regardless of appalling economic conditions - as illustrated for instance in today’s slump-struck Brazilian car market - consumers love them with a passion. 

In days gone by the world could be divided into different regions following their own individual car buying trends. 

Japan’s car buyers opted in ever growing numbers for their tiny and unique Kei-Cars, India’s buyers bought cheap and cheerful small cars lacking most, if not all critical safety structures and Russians opted in droves for the small, cheap and crude cars built at largely decrepit and grossly over-manned domestic car plants. 

Consumers in leading West European markets like Germany and France continued to pile into Golf-type hatchbacks or when opting for more substantial large cars they went for estates. 

That leaves China and North America. 

While most Europeans wouldn’t touch small three-box saloons like VW’s Golf-based Jetta, for decades the bulk of China’s car buying public bought nothing else. 

While that characteristic was shared also by most Americans, the US stands out as the only major global car market where an everyday Pick-Up has long stood out as the nation’s top-selling car. 

Given that in the US the average price of fuel is less than half the price paid in Europe, it’s hardly surprising that comparatively thirsty SUVs as we know them were born in the land of the free.

As Ford, for one, has discovered to its peril, in global automotive history carmakers were left with little alternative but to design and engineer cars aimed specifically at ruling tastes in the various world markets. 

The added expense goes without saying. 

Ford’s Mondeo, as its name implied, was optimistically conceived to suit the tastes of most global new car buyers. 

Not so, as it turned out. Fast forward to the present day, and for carmakers, today’s global car market has become a great deal easier and more wallet friendly. 

The main reason is - probably for the first time in global automotive history - that new car buyers in Beijing, Boston, Berlin or Bombay are now effectively craving for the same type of car. 

Yes, the world, near enough at the same time, has fallen in love with SUV-Crossovers.

Significantly, it means that carmakers can effectively design and engineer one type of car, knowing full well that apart from minor inexpensive tweaks in specification and safety equipment, these genuine ‘world cars’ will now be snapped up by keen buyers in all but a few markets. 

This is borne out by facts. 

Today SUVs act as a main demand driver in China, Western Europe, in the US and even in in slump-struck Brazil. 

Perhaps most telling of underlying global demand conditions, this May US sales of conventional passenger cars like Toyota’s Camry slumped 16.1 per cent, bringing the year to date plunge in sales to 8.2 per cent. 

May sales of SUV-Crossovers, in pin-sharp contrast rose 3.3 per cent, bringing the gain at the five months stage to 8.2 per cent.

Thanks to the markedly higher profitability of today’s still passionately loved SUVs, abundant extra profits are continuing to swell carmakers’ coffers. 

Now, in anyone’s books, that’s a true win-win scenario. 

But as ever, while SUV-Crossover demand is still booming - including India, where the only recently launched KWID has transformed Renault’s sales fortunes overnight - the carmakers’ strategists are already beginning to wonder about the next trend in the making. 

At this stage nobody knows for certain when today’s still flourishing planet-wide SUV love affair will end. 

But the one certainty is, when it finally ends, like the end of most conventional love affairs, for many this is going to hurt - a lot
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