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Soaring SUV sales keep carmakers on collision course with climate policy

12 Comments
By Edward Taylor

Soaring demand for SUVs drove record sales for premium carmakers including BMW and Mercedes last year, leaving the industry on collision course with government efforts to tackle global warming despite big investments in electric vehicles.

BMW said on Friday deliveries by its main luxury brand rose 2% to a record 2,168,516 vehicles last year, thanks to a 21% jump in sales of its "X" branded sport-utility vehicles(SUV) which now make up 44% of the BMW brand's global sales.

At Mercedes-Benz, the world's best selling premium car brand, every third luxury car sold last year was an SUV.

Automakers across the world are investing billions in electric vehicles to try to meet tougher emissions regulations. But the jury is out on how many drivers will buy them.

"Consumer preferences for SUVs could offset the benefits from electric cars," the International Energy Agency (IEA) warned in its November World Energy Outlook 2019 report.

The IEA said a doubling in market share had seen emissions from SUVs grow by nearly 0.55 gigatons of carbon dioxide (CO2) during the last decade to roughly 0.7 gigatons.

As a result, SUVs were the second-largest contributor to the increase in global CO2 emissions since 2010 after the power sector - ahead of heavy industry including iron and steel, cement, aluminium, as well as trucks and aviation, it said.

There are now more than 200 million SUVs around the world, up from about 35 million in 2010, accounting for 60% of the increase in the global car fleet since 2010, IEA data shows.

"If the popularity of SUVs continues to rise in line with recent trends, this could add another 2 million barrels per day to our projection for 2040 oil demand," it said.

The German carmakers say their vehicles are among the most fuel efficient available, thanks to hybrid and other technologies, adding customers could also choose to buy smaller, more frugal cars instead of SUVs.

Both BMW and Mercedes-owner Daimler say they aim to achieve new sales records this year, and are preparing to launch fully electric SUVs - the BMW iX3 and Mercedes-Benz EQC - which they say shows a commitment to a cleaner future.

EFFICIENCY GAINS

While acknowledging the growing popularity of SUVs, Germany's powerful VDA auto industry association said much of the demand was for more efficient models.

"Only just under 5% of SUVs are large luxury class vehicles. The market success of the SUV segment is mainly due to the model offensive in compact and medium-sized SUVs, with correspondingly lower fuel consumption," VDA said on Thursday.

The newly registered SUVs of German group brands had reduced their CO2 emissions by 35% since 2008, it added.

European Union lawmakers agreed in December 2018 that automakers had to cut CO2 emissions from cars by 37.5% by 2030 from 2021 levels, in addition to a 40% cut between 2007 and 2021, or face fines.

Evercore ISI analysts say the average German auto fleet emission is still too high at around 124 grams per kilometre in Europe, compared with the average limit of 95 grams per kilometre for 2020.

"The current CO2 performance is simply not good enough and we continue to flag that carmakers run the risk of facing considerable fines if more is not done," they said in a note.

Electric and hybrid vehicles made up only 3.9% of new European sales in the third quarter of 2019.

BMW plans to launch 25 hybrid and electric cars by 2023, with more than 12 models being fully electric versions.

By 2025, half of all its cars are expected to be hybrid or electric vehicles, it said.

Mercedes expects half of its sales to be hybrid or electric by 2030, with Europe reaching the 50% mark in 2025.

Peter Fuss, a partner at EY, said German carmakers pushed sales of higher-margin SUVs last year ahead of the introduction of the more stringent European clean air rules in 2020.

In the fourth quarter of 2019 there was an unusually large rise in commercial registrations in Germany, Italy and Britain compared with figures for private consumers, in a sign carmakers were pushing more polluting models into the market.

"We will not see the same growth rates in this segment as we did last year," Fuss said.

Electric car registrations are expected to take off in mid 2020, he added.

But that will depend on drivers being prepared to buy them, and perhaps also on how cheaply manufacturers are prepared to sell them.

© (c) Copyright Thomson Reuters 2020.

©2020 GPlusMedia Inc.

12 Comments
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SUVs due to the weight, are much safer in collisions then eco cars.

The laws of Physics don't care about eco policies.

If a large SUV collides with an eco car. The occupants of the SUV will barely be phased, whilst the people inside the eco-car will likely face extreme injuries.

-2 ( +3 / -5 )

There are ecological SUVs as well. I'm not sure what the problem is. Eco activists should focus on improving the emission standards on big ships, running on bunker oil. Those are the main pollutants nowadays But extreme margins. But they're not as easy a target for the lazy activist as auto makers are..

-1 ( +2 / -3 )

Private Jets should be first to get the axe.

But the elite will never allow that, better that regular soccer moms bear the brunt.

0 ( +3 / -3 )

@Burning Bush

SUVs due to the weight, are much safer in collisions then eco cars.

This is not true due to the SUV tendency to flip over.

0 ( +2 / -2 )

So SUVs are becoming more popular worldwide. It's not just only a U.S. thing anymore.

2 ( +2 / -0 )

Whilst I dont like driving SUVs, I understand their appeal, with ever-expanding families all around the world. You cant fit a family of 7 in a compact car or sedan that for sure. The key is to buy eco SUVs - hybrid ones and, in the next couple of years, all-electric SUVs.

Sadly, the sedan will no longer exist in 5 years, except for a handful of niche models.

2 ( +2 / -0 )

SUVs are popular because they are USEFUL, hence the name SPORT-UTILITY Vehicle. The auto market, like any other market is led by CONSUMER demand, not eco+Nazi activism.

-3 ( +1 / -4 )

SUVs are not necessarily safer due to body roll during cornering. They are also way more dangerous for pedestrians who get pushed under, not flipped over as with cars with a lower front. A broken leg is much better than being pushed under and crushed to death.

Despite all the hype, most SUVs are crossovers, rugged looking bodywork on a standard chassis that is not actually offroad capable. Many crossovers in Japan will be 2WD.

For all the moaning above, I am actually a crossover owner. We have a CX-5, the turbodiesel one with leather seats. Its a beautiful car, the styling is much more Audi or BMW than JDM, and it really shifts. Its got something like 180hp. We get 13.5 km/l off 120 yen diesel, so it's cheaper per km to drive than most 4wd compact cars, like a Honda Fit that'll get 15km/l off 145 yen regular gasoline. Mazda have been producing some cool cars in the last ten years, a minor success story. Go Hiroshima!

1 ( +2 / -1 )

I still want one these beauties

https://www.autorestorationice.com/2015/06/rare-4wd-isuzu-vehicross-suv.html?m=1

0 ( +0 / -0 )

In the beginning, people bought SUVs because they had a more "rugged" image than tame, domesticated minivans. That jig is up for the most part; nowadays people are more likely to get them for their versatility, high seating position, imagined or real cold-weather capability, towing, ability to carry large numbers of passengers, etc. However, I don't buy it. SUVs often try to be a jack of all trades, but a master of none. For every supposed advantage, there is a disadvantage- the large size and high center of gravity impairs driving dynamics, smaller crossovers are little more than lifted hatchbacks, and even in mid-size crossovers you normally have to choose between passengers or cargo. Bottom line, if you need a truck, buy a truck; if you need a luxury car, buy a luxury car; and if you need to move a lot of people, folks, just go ahead and get the van already.

0 ( +0 / -0 )

Mr Market is led by CONSUMER demand, regardless of the PC/ECO-NAZI agitation. Where I live, luxury sedans(gas guzzlers) and SUVs are the most popular and what I drive as well.

-2 ( +0 / -2 )

Climate change happened before SUVs and will happen after SUVs. And the estimated 120 bbs of accessible crude oil (a bit more now thanks to cracking) will be consumed regardless if there are SUVs and regardless what laws some Western politicians pass.

0 ( +0 / -0 )

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