Premium compact crossover demand to grow further on model launches

28 Aug 2017 Ian Fletcher

Although the global compact crossover category has grown vastly during the last decade, activity at the upper end of this segment has been particularly significant as premium brands extend their vehicle portfolios.

IHS Markit perspective

  • Significance: Although the global compact crossover category has grown vastly during the last decade, activity at the upper end of this segment has been particularly significant as premium brands extend their vehicle portfolios.
  • Implications: Further expansion is set to take place with existing players in this category to broaden their line-ups, alongside new additions from Volvo and Jaguar.
  • Outlook: IHS Markit expects sales of these vehicles to grow by around 8.2% y/y to over 1.24 million during 2017 and on to 1.68 million by the end of 2020.

It is a recognised fact that the global compact crossover market has grown significantly during the past decade. Customers in established markets have transferred their allegiances from traditional hatchbacks, sedans and estates and even previously buoyant sectors such as multi-purpose vehicles (MPV). Those in developing markets have made the jump to these appealing products with their high driving position, imposing exteriors and modest off-road capabilities. During the past decade, global sales of this type of vehicle have grown from just over 3.31 million units in 2007 to 12.83 million units in 2016.

However, at the upper end of the pricing and brand scale within this segment (classified as Global Sales Price Class "2" in IHS Markit definitions), the gains have been even more significant. Beginning in 2007 when the premium compact crossover market was effectively made up of only the Land Rover Freelander, global sales stood at just 64,500 units. By 2016, sales had reached as high has 1.147 million units.

The category has developed as premium brands made an entry as part of a strategy to expand their vehicle portfolios. BMW was the first with the X1 during 2008, followed by the Mini Countryman in 2009, and the Range Rover Evoque and Audi Q3 in 2010. Other models to make waves in this category in recent years have been the Mercedes-Benz GLA and Lexus NX. Many of these vehicles are now selling over 100,000 units per annum (upa) and in some cases almost over 200,000 upa. However, it has not all been successes, with the Mini Paceman being a notable misstep for the brand as customers have struggled to grasp the concept.

On a market basis, much of the focus for premium crossover vehicles is on Europe, North America and Greater China. The largest region is the European Union (EU) and European Free Trade Agreement (EFTA). In 2016 around 426,800 units were sold, with the UK being the largest single market with 109,300 units, ahead of Germany and Italy. However, the largest single market globally is the Chinese market, where sales reached 329,600 units, followed by the US in which 193,000 units were sold.

Outlook and implications
The market for such vehicles looks set to rise further in coming years as like in the mainstream crossover category, newcomers and existing players further broaden their ranges with them as they tap in to the boom. The most recent addition has been Jaguar, which has introduced the E-Pace, a vehicle that it described as having "sports car design and dynamics in a five-seat compact performance SUV". It will be followed before the end of the year by Volvo's new XC40. Both will be hoping that these models will emulate the success of larger models in the sport utility vehicle (SUV) space. Others planned to move into this space include Cadillac.

Other premium OEMs with product already in this space are planning to expand their line-ups even further. BMW plans to launch a vehicle known as the X2 based on a concept that was revealed at the Paris Motor Show (France) in 2016, which is intended to be a more rakish and sporting alternative to its X1. The forthcoming Audi Q4 is also expected to take this approach as it takes inspiration from the TT Offroad concept show at the Beijing Motor Show (China) during 2014. However, Mercedes will go in another direction with its GLB, which on joining the GLA, will take its inspiration from the large G-Class in terms of its design presence and utility. All three are due to begin reaching customers by the end of 2019. Furthermore, it is expected that Lexus will introduce an additional model, and DS Automobiles' will add the DS7 Crossback, which will join the China-only DS 6.

Sales of these vehicle will grow relatively modestly during 2017, increasing by around 8.2% y/y to over 1.24 million, and we expect consumer interest in these forthcoming models to further widen the market. IHS Markit sees registrations of this type of vehicle growing to over 1.68 million units by the end of 2020. However, this ignores those brands that are on the cusp of the premium category such as Jeep, as well as mainstream brands offering models with ambitions of competing in that space, such as those in China.

About this article

The above article is from AutoIntelligence Daily by IHS Markit. AutoIntelligence Daily provides same-day analysis of automotive news, events and trends.​​​​​​ Get a free trial.


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