Although the decreases in fuel prices affected SUV sales, the more impactful reason lies in the fact that automobile producers have expanded the range of products offered within this specific automotive segment. Just like the sedan segment, SUVs are now separated into luxury and non-luxury classifications and come in compact, mid-sized, full-sized and hybrid differentiations. In order to clarify the differences in size, let us use BMW as an example, in which the X3 is classified as compact, X5 as mid-sized and X6 as full-sized. Due to the diversification, SUVs are not solely seen as off-road vehicles but adaptable to urban or suburban lifestyles. The production of hybrid vehicles and eventually electric ones (such as the Tesla Model X) ensures that the SUV trend will continue to grow and target green consumers in the future.
With diversification comes competition, which further pushes the prices of SUVs to fall dramatically. In the past, vehicles of this size required a hefty investment from consumers, easily around $50,000 or beyond. Compare that to the newest Great Wall X200, which boasts a competitive value of $25,000. The increase in competition does not solely stem from growing markets such as China or India. In fact, competition amongst the luxury SUV segment is gaining just as much traction with Daimler recently joining BMW, Audi and Porsche as high-end manufacturers. Additionally, Maserati, Lamborghini, and Bentley are all expected to release their sport SUVs in the coming year or years in order to capture the growing demand amongst high-end consumers.
Another contributor for the decrease in price, other than the fierce competition, is the change in manufacturing and technology. In the past, the vast majority of SUVs were built with four-wheel drive capabilities (4x4), in order to maintain the image that this segment is specifically designed for off-road and harsh terrain or weather conditions. With the increase in demand, automotive OEMs have adapted themselves by manufacturing SUVs which have two-wheel drive capabilities. With this development, manufacturers are able to mass-produce these larger vehicles, in a similar fashion as regular cars to reduce costs significantly.