Climate change. Traffic congestion. Urban sprawl. Clearly, what the world needs now is more transit, less traffic and – for those who must drive – a shift to more fuel-frugal vehicles.
Try telling that to shoppers who keep propelling sales of luxury SUVs to greater heights. Sales are soaring in the United States and in Canada, too. Industry sales of luxury SUVs and CUVs in Canada surged 17 per cent last year in an overall market that grew only 3 per cent. The category counts almost 50 nameplates – far more than any other vehicle species, and is a telling indicator of the profits that attract auto makers to the genre.
Meanwhile, sales of luxury-brand passenger cars fell 4.5 per cent in 2016.
At first glance, it's easy to attribute the surging luxury-SUV sales to new entries at the "affordable" end of the scale – compact and even subcompact CUVs such as the Lexus NX, Infiniti QX30 and Audi Q3. But while that may be true over the past three years, established mid-size-and-larger models grew their sales even faster last year, up 18 per cent on average.
The sharpest growth in Canadian luxury-SUV sales included big, expensive models such as the Lexus NX.
Lexus
"The preponderance of new vehicles tending to be SUVs certainly does help fuel sales, and I do think people have responded to that," says Stephanie Brinley, senior auto analyst at IHS Markit Automotive. At the same time, she said, when models are refreshed or redesigned, the accompanying publicity helps boost sales.
Yet, the sharpest growth in Canada included big, expensive models that were unchanged in 2016 – the Infiniti QX80 (starting price $75,650, sales up 46 per cent in 2016); the Lexus LX ($108,000, sales up 115 per cent); and the Cadillac Escalade ESV ($88,385, sales up 122 per cent).
Jaguar's first SUV debuted last year and is outselling all four Jaguar passenger cars combined. It's the same story with debut SUV entries from Bentley and Maserati.
In the case of the Escalade ESV, the spike in sales was a result of increased supply, said Hoss Hassani, managing director for Cadillac Canada: "Last year was the first year we were able to secure a sizable increase in production." New nameplates on smaller CUVs may be the main driver of segment growth, he says, "but as we've seen with Escalade, there is still a lot of unmet demand there, too."
Sales of the Cadillac Escalade ESV were up 122 per cent in 2016 from the year before – a result of increased supply in the Canadian market.
General Motors
The growth of the genre flows from the convergence of two separate trends: the overall industrywide shift from passenger cars to CUVs and SUVs; and a growing consumer appetite for luxury brands. "In our last Canadian Automotive Brand Telemetry Report, we noted a significant number of respondents indicating they would be moving to luxury vehicles with their next purchase," said Paul McCallum, vice-president of automotive solutions for Bond Brand Loyalty, an agency that works with companies to boost customer engagement.
"This, tied to the amazing driveability and versatility of today's SUVs, absolutely supports an increase in this market. And let's not forget, if your house increased in value by 20 per cent in the past year … might you be less worried about spending a little more on your next vehicle?"
It could be, too, that some consumers financially stretch themselves to acquire these status symbols. Leasing is more popular in the luxury segment, and "the continued growth of leasing and longer finance contracts would suggest that buyers may be stretching into more expensive [luxury or near-luxury] vehicles at lower payments," McCallum says.
Not all large luxury CUVs are gas guzzlers. Some European brands offer hybrids and/or diesel engines (Mercedes-Benz diesels are on hiatus, but they historically accounted for the majority of sales of the models on which diesel was available). The segment also includes the all-electric Tesla Model X.
At the same time, there are growing numbers of ultrahigh-performance models. If 550-600 horsepower (BMW M, Mercedes-AMG, Range Rover SVR etc.) isn't enough for inching along Toronto's Gardiner Expressway en route to your Bay Street office, Jeep's upcoming 2018 Grand Cherokee Trackhawk will house 707 hp under the hood.
Trackhawk pricing hasn't been announced, but it's sure to be a performance value compared with, say, the top-line version of the Mercedes G-Class (a model that, unlike most SUVs, is a genuine hard-core off-roader). The AMG G 65 has a 6.0-litre, twin-turbocharged V-12 engine rated at 621 hp – and a sticker price of $250,500.
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