8th February 2019

Will SUVs become less popular due to WLTP and other factors?

Over the last decade or so, sport utility vehicles of varying shapes and sizes have proliferated. The SUV became the most popular type of car across Europe by 2016, accounting for a sizeable 22%-plus market share overall, with mid-size SUV sales having mushroomed to the tune of 42% compared to the previous year. These statistics from JATO Dynamics at that time also identified SUV sales in the UK experiencing 24% growth.

Media outlets harmoniously attributed the SUV’s meteoric rise in popularity to specific reasons, The Sunday Times’ Driving1 section, for example, explaining: “Increasing numbers of drivers view SUVs as an appealing alternative to family hatchbacks, saloons and MPVs, or people carriers. They offer the reassurance of a raised driving position, rough and tough looks, a family-friendly interior and, increasingly, affordable running costs.”

SUVs still bucking trends at face value

Fast forward and the SMMT identified a 6.8% decline in new car sales in the UK during 2018, with a significant 29.6% drop in diesel registrations, but SUV demand refused to buckle and actually rose 9.1%, while one of Ford’s answers to the difficulties facing it along with JLR and certain other car-makers is to focus increasingly more on its SUV range2, which may seem slightly ironic to some.

Judging by the list of models due for arrival in the UK throughout 2019, SUVs seem as abundant as ever, examples including the aesthetics-focussed Audi Q4, massive BMW X7, Citroen C5 Aircross, new Mercedes GLE which is admittedly the first SUV to boast a Euro6d-full and RDE2-compliant engine, SEAT Tarraco and new Toyota RAV4.

The effect of WLTP on SUV sales and leases

Since September 2018, though, all new models in general have been required to be certified under the new WLTP test procedure3, introduced with the aim of providing car buyers, leasing customers, fleets and others with more accurate and realistic CO2 and MPG data that closely resembles on-road performance.

Following rehomologation, existing models are currently marketed with NEDC-correlated CO2 values, and while such vehicles’ actual tangible performance abilities and fuel consumption behaviours aren’t impacted by WLTP, many have been subject to CO2 emissions figure increases4, with Cap HPI having identified a rise of 10% while JATO Dynamics5 places it as high as 18%.

As Autovista Group explained in Q4 2018, benefit-in-kind (BIK) taxation on company car drivers is significantly based on CO2 emissions figures, and although they point to the deviation between WLTP and NEDC-correlated numbers paradoxically resulting in smaller cars suffering a steeper increase6, a range of voices including Kwik-Fit predicted that the advent of WLTP would dampen demand for SUVs7. It must be noted, however, that standalone non-homologated WLTP test figures won’t be used for new car registrations until the start of the 2020 tax year8.

Will SUVs become less popular due to WLTP and other factors - blog opinion thought leadership

Simplified model ranges and bundled options packages

With wheel rim size, tyre width and other specified options also impacting on CO2 emissions in relation to WLTP, Kwik-Fit’s GB fleet sales director Andy Fern commented in H1 2018 that the situation “may put an end to” what he described as “the migration of company car drivers towards choosing SUVs”, foreseeing that OEMs will now shy away from offering larger wheels in particular.

Countering this anticipated trend, though, Green Car Congress9 mooted the notion that “SUVs are better equipped to deal with the ramifications of the new testing procedure as they have more updated models than the other segments” and it’s certainly clear from just the handful of example models we cited earlier on that the tide of new SUV launches is seemingly continuing unabated.

Since that time, the simplified model ranges10 and bundled options packs that many car manufacturers have introduced will unarguably have made managing new car stocks more manageable11 and streamlined fleet managers’ input to an extent, but SUVs’ alloy wheels don’t appear to be reducing in size. Take the brand new SEAT Tarraco, for instance. Its marketing collateral includes the messaging: ‘One size does not fit all. Like to live large? Lightweight 20” Machined Alloy Wheels are for going big. Starting now.’ VW’s newish T-Roc, meanwhile, can be specified with 19” alloys, as can many other refreshed or entirely new SUV and crossover models.

Confusion and misnomers surrounding SUVs

Vehicle excise duty, commonly known as the road tax private motorists pay each year, is based on CO2 emissions and is set to increase12 in April 2019 in line with RPI ‘inflation’. Admittedly the impact in monetary terms for each car-buyer or leasing customer will be negligible, but consumers are becoming increasingly aware of their carbon footprints and how choices they make have a small but contributory effect on the environment.

The government and many other voices have been keen to condemn diesel, so taking the Kia Sportage in 1.6 GDi petrol 2WD guise as an example, in ‘1’ trim with 16″ alloys it emits 158g/km CO2, while the popular GT-Line variant with 19″ alloys emits 179g/km CO2 under NEDC, while WLTP figures are cited as 179g vs 203g respectively. Essentially, to enjoy the best styling, comfort, infotainment, technology and even safety options available on all manner of models, large wheels are mandatory, resulting in relatively higher CO2 emissions.

Confusingly, though, Peugeot13 states on its website that “CO2 and fuel economy figures may vary according to wheel fitment and optional extras fitted” but then goes on to state: “Please note, the fitment of the 19″ ‘Washington’ alloy wheel option (ZHCB/ZHFQ) lowers the CO2 output and in some cases BIK tax on Allure and GT Line models.”

The world’s driveways and roads are awash with SUVs, but many of them don’t offer any 4×4 ability at all, somewhat belying their image. Additionally, their boot capacities typically offer less space than MPVs or estates, the VW Tiguan for instance providing 520 litres compared to the Passat estate with 650 litres and the Touran people-carrier with 743 litres.

Will SUVs become less popular due to WLTP and other factors - shooting brake estates - blog opinion thought leadership

Does a new trend look likely to emerge?

While WLTP, options lists and other monetary factors will unarguably impact more and more fleets’ and company car drivers’ decisions over leasing SUVs, private motorists seeking added individuality may soon look elsewhere simply because of how ubiquitous the body-style has become.

Autocar’s editor-at-large Matt Prior declared boldly that “Coupes and wagons will soon replace SUVs”14 and after outlining how Nissan was the chief architect that identified the appetite for high-riding cars which actually perform relatively poorly in other areas as a result, he cited Mercedes, Kia and Peugeot as OEMs credibly placed to reshape consumers’ thinking at a time when they and other large companies will have to play an increasingly key role in lowering CO2 emissions and meeting other targets.

Matt spoke with Peugeot’s CEO Jean-Philippe Imparato at the launch15 of the 508 and was intriguingly asked: “When everybody’s got one, is it the premium choice anymore?” before it was revealed that the French marque is “trying to invent the after-SUV”. Similarly, Artur Martins, responsible for product-planning at Kia, told Autocar that “The buyers who bought the first SUVs, some of those are going to go back to a four-door coupé, which is a more emotional product.”

Many sections of the media are seemingly supportive of the idea of drivers favouring a return to lower and hence more aerodynamic and economical cars, Evo16 for example commenting under the headline ‘New 2019 Peugeot 508 SW aims to render SUVs useless’ that “the 508 SW may not be as on-trend as those savvy SUVs, but will likely prove to be nicer to drive, cheaper and more practical”. The Telegraph, meanwhile, questioned “why would anybody buy an SUV?” in its review of the Volvo V60 Cross Country17.

As a combined result of ever stricter European air pollution targets, fleets’ increased awareness of how different models’ CO2 emissions impact their bottom lines, powerful media messaging that undoubtedly shapes consumer behaviour as illustrated by the shift back to petrol, and drivers simply seeking individuality perhaps coinciding with Brexit finally happening in some form, it’s conceivable that SUVs may indeed be replaced by stylish estates and other styles in as little as two-to-five years.

 

Sources:
1. https://www.driving.co.uk/news/suvs-hit-overdrive-as-europes-most-popular-type-of-car/
2. https://www.businesscar.co.uk/analysis/2019/industry-urges-support-for-clean-engine-technology
3. http://wltpfacts.eu/what-is-wltp-how-will-it-work/
4. https://www.fleetnews.co.uk/news/fleet-industry-news/2018/06/18/new-correlated-co2-values-push-company-cars-into-higher-tax-bracket
5. https://internationalfleetworld.com/vehicles-re-tested-under-wltp-showing-greater-than-expected-co2-rises/
6. https://autovistagroup.com/news-and-insights/wltp-focus-impact-uk-company-car-taxation
7. https://fleetworld.co.uk/wltp-could-curb-suv-demand/
8. https://www.volkswagen.co.uk/owners/wltp
9. https://www.greencarcongress.com/2018/10/20181026-jato.html
10. https://www.autoexpress.co.uk/volkswagen/105438/volkswagen-to-reduce-model-count-and-increase-vehicle-costs
11. https://www.businesscar.co.uk/analysis/2018/perfect-storm-approaches-for-fleets-in-2019
12. https://www.thisismoney.co.uk/money/cars/article-6330411/VED-car-tax-rates-hiked-April-2019.html
13. https://media.peugeot.co.uk/file/98/0/new-3008-suv-prices-and-specs.127980.pdf?lcdv16=1PP8SYHCRKT0AXXX
14. https://www.autocar.co.uk/opinion/tester%E2%80%99s-notes/matt-prior-coupes-and-wagons-will-soon-replace-suvs
15. https://www.autocar.co.uk/opinion/tester%E2%80%99s-notes/matt-prior-are-shooting-brakes-next-industry-mega-trend
16. https://www.evo.co.uk/peugeot/508/21333/new-2019-peugeot-508-sw-aims-to-render-suvs-useless
17. https://www.telegraph.co.uk/cars/volvo/volvo-v60-cross-country-review-would-anybody-buy-suv/