Future Of SUV Market

[87 Pages Report] The SUV market is projected to reach 53 million units by 2030 from 41 million units in 2024, at a CAGR of 4.4%. The SUV segment has rapidly gained popularity among consumers owing to its road presence, space & size, stylish design, and advanced safety and comfort features. Mid-size and full-size SUVs with in-cabin safety and comfort features such as 4WD/AWD, automatic transmission, advanced powerful engine, heated/ventilated seats, heated steering and rear air conditioning have increased across all regions. Consumers around the globe prefer compact and mid-size SUVs over sedans and hatchback cars because of their versatility and cargo space.

The Asia Pacific dominates the SUV market by volume, owing to the high share of passenger vehicles and SUV production in China, Japan, India, and South Korea. The growth drivers of the SUV market include the rising demand for comfort features in premium SUVs as well as the shifting trend for compact and stylish SUVs, mainly in developing countries of the Asia Pacific, which offers a combined functionality of premium hatchbacks and SUVs at an affordable cost. The Asia-Pacific market holds over half of the share of the global market. Whereas North America holds just over 1/4th and Europe comprises below 1/5th of the share in the global market.

The mid-size SUV holds the largest share, by type segment, due to its larger passenger capacity and ample cargo space during long journeys. Consumers opt for mid-size SUVs due to their large interior, comfort, and safety features for both the driver and passenger. Large families prefer mid-size SUVs for long drives because of their ample space for luggage and passengers. Moreover by propulsion, the ICE type holds the largest share of the SUV market. However, the latest NOx and PM limits have forced OEMs to develop fuel-efficient vehicles, leading to higher vehicle costs. This would restrict new buyers from buying diesel SUVs, increasing their vehicle acquisition and maintenance costs. This would serve as a promising growth opportunity for BEV and hybrid SUVs.

To know about the assumptions considered for the study, Request for Free Sample Report

To know about the assumptions considered for the study, download the pdf brochure

Market Dynamics:

Driver: Demand for premium vehicles with advanced features

The growing state of the world economy and generally rising consumer lifestyles, which result in more disposable income, are driving the future of SUV market. SUVs are popular due to changing consumer preferences and modern lifestyles along with increasing sales of ultra-luxury variants. Customers expect advanced connectivity technologies that enhance comfort, safety, and entertainment. The market is also impacted by the latest electrification of powertrain technology and increasing interest in autonomous driving. OEMs offer the latest technologies using artificial intelligence and machine learning in these SUVs, such as ADAS, personal assistance voice control, retina recognition, remote services, and real-time traffic information, among others, to keep consumers connected with the outside world. The premium SUV market growth is expected to remain strong as consumers perceive safety, styling, and attractive aesthetics. Wide subsegment offerings by OEMs with advanced upgrades would attract and create a new set of customers for this segment in the coming years.

Driver: Consumer inclination toward compact SUVs

Compact SUVs have comparatively smaller engines, resulting in higher fuel efficiency, better maneuvering ability, high ground clearance, and chassis-framed body structure for off-road performance. It is modified for urban areas with relatively better maneuverability around city streets and a sporty body design. It is preferred over premium hatchbacks as it is available at an almost similar price range with rugged styling, upright driver seating position, and high ground clearance. The cost of compact SUVs is near to sedans and hatchbacks. The compact SUV is focused on the young generation, mainly in the North American and Asia Pacific countries such as China and India.

Restraint: High cost of SUVs

Due to their higher cost than sedans and hatchbacks, which makes them less affordable for consumers on a tight budget and may prevent the growth of SUV market. The compact SUVs market grew significantly in developing nations whereas the mid-size witnessed a growth in developed as well as developing nations. On the contrary, the consumers in the developed nations prefer full-size SUVs which are generally loaded with premium features. These SUVs have powerful engines and high flexibility for off-roading manoeuvring. Moreover, the htop end models are equipped with wide touchscreen infotainment screens, heated seats, strong air conditioiner for last row seats, sunroofs, assistance for parking as well as while driving. These makes the full-size SUVs costlier compared to hatchbacks and sedans. In addition, several of these features are not included in the compact and mid-size SUVs as they are specifically designed for costumers with budget constraints. Including these features in compact and mid-size SUVs will increase the overall prices of the SUVs and act as a restraint to the growth of overall SUV market.

Opportunity: Growing adoption of connected vehicles

With the growing increase in global vehicle sales, government & regulatory bodies such as European Commission (EC) and the US Environmental Protection Agency (US EPA) have implemented stringent emission norms for controlling GHG emissions. Stringent emissions regulations have shifted the global focus towards electric vehicles, which has resulted in exponential growth of these vehicles in recent years and simultaneously for electric SUVs. Many automotive OEMs are launching their electric SUVs in the market. According to IEA Global EV Outlook 2021, more than 55% of announced models globally are SUVs and pickups. The potential reason for electrification is that the SUV is amongst the heaviest and most fuel-consuming vehicles, and electrification would help to meet stringent emission targets.

Challenge: Challenges in meeting fuel economy and emission limits

The SUV market has grown at a decisive pace in recent years. According to IEA, the number of SUVs increased by more than 35 million globally in 2021, driving up annual CO2 emissions by 120 million tonnes. Typically, full-size and mid-size SUVs are equipped with larger engines, generating higher emissions and offering lower fuel economy. The engine sizes of top-selling full-size SUVs or large SUVs in the US range from 355HP to 420 HP, whereas in Europe, the engine sizes of top-selling large SUVs are between 315 HP to 400 HP. Considering the stringent emission targets by regional bodies, SUVs, especially mid-size and full-size segments, continue to dominate conventional powertrains, which run on gasoline or diesel fuel. Though OEMs are developing hybrid powertrains to join the race of electric vehicles, a handful of SUV models run hybrid or electric powertrains. Thus, rising stringent government regulations on conventional SUVs and less fuel economy can hinder the growth of the ICE engine SUV Market. 

“Asia-Pacific holds the major share in the market”

The Asia Pacific dominates the SUV market share by volume and value, owing to the high share of passenger vehicles and SUV production in China, Japan, India, and South Korea. The growth drivers of the SUV market include the rising demand for comfort features in premium SUVs as well as the shifting trend for compact and stylish SUVs, mainly in developing countries of the Asia Pacific, which offers a combined functionality of premium hatchbacks and SUVs at an affordable cost. Full-size SUVs offer several advantages such as versatility, multiple drivetrain options, off-roading capabilities on rough and unpaved terrains, heavy towing capacity, larger seats and trunk space, as well as a higher level of comfort and competitive price range against sedan cars.

Key Market Players

Toyota Group, Hyundai Group and Volkswagen Group are the top three market share holders with 10% and above share each in the global market. Approximately 50% of the share in the SUV market is held by Toyota, Hyundai, Volkswagen, Renault-Nissan-Mitsubhishi, General Motors and Stellantis N. V. There are over 40 other groups/OEMs holding market share less than 4%. These are mostly regional OEMs or only luxury SUV manufacturers. The EV companies are focused on battery technology development and investing into the battery ecosystem to ensure a sustainable supply chain. These companies adopted new product launches, acquisitions, partnerships, collaborations, and other key strategies to gain traction in the automotive market.

Want to explore hidden markets that can drive new revenue in Future Of SUV Market?

Unlock Insights

Scope of the Report

Type

• Sub-Compact
• Compact
• Mid-size
• Full-size
• MPV

Propulsion

• Internal Combustion Engine (ICE)
• Electric Vehicles (EV)
• Hybrid (HEV, PHEV)

Region

• North America
  • US
  • Canada
  • Mexico
• Europe
  • Germany
  • France
  • UK
  • Spain
  • Italy
  • Rest of Europe
• Asia Pacific
  • China
  • India
  • Japan
  • South Korea
  • UAE

Recent Developments

• In February 2024, VinFast conducted the ground-breaking ceremony for its upcoming manufacturing plant in Thoothukudi, Tamil Nadu, India. The proposed investment amounts to USD 2 billion, with an initial investment of USD 500 million.
• In February 2024, Toyota announced to invest $1.3 billion in a Kentucky plant to produce a three-row SUV for the US market. The plant will be functional from late 2025 or early 2026, wherein the plan is to manufacture EV SUVs.
• In January 2024, General Motors Co. and Honda Motor Co. announced the start of hydrogen fuel cell production from their 50-50 joint venture in Michigan.
• In December 2023, Neta Auto has started production at its first overseas electric vehicle plant in Thailand, further expanding its presence in the Southeast Asian country. The facility is expected to have an annual capacity of 20,000 cars, with large-scale production scheduled to begin in 2024.
• In December 2023, BYD announced the construction of a new manufacturing and production center in Szeged, Hungary.
• In November 2023, Hyundai Motors and Amazon signed a strategic partnership to sell Hyundai cars on through Amazon.com from 2024.
• In September 2023, Lucid Group Inc. has officially opened the first-ever car manufacturing facility in Saudi Arabia. The facility will produce Lucid’s electric vehicles (EVs) for Saudi Arabia and export to other markets
• In July 2023, Stellantis announced to build a electric vehicle battery factory in a joint venture with Samsung by early 2027 in US, Indiana.
• In June 2023, Ford Motor Company (Ford) and SK On signed a joint venture agreement to set up EV battery plants in Tennessee and Kentucky. This joint venture to get $9.2 billion loan from the US government.
• In June 2023, Hyundai Motor Group and Vodafone Business signed a partnership to provide customers with advanced in-car connected streaming and infotainment services in more than 40 countries across Europe.
• In May 2023, Hyundai Motor Group and LG Energy Solution (LGES) announced an EV battery cell manufacturing joint venture in US.
• In May 2023, ACC opened its first car battery manufacturing plant in France with an aim to be self-sufficient in vehicle battery production by 2027.

Frequently Asked Questions (FAQ):

To speak to our analyst for a discussion on the above findings, click Speak to Analyst