Europe's booming small SUV segment is giving a much-needed boost to beleaguered mass-market brands such as Renault, Peugeot and Opel.
The success of models such as the Renault Captur, Peugeot 2008 and Opel/Vauxhall Mokka also is attracting more automakers to the sector as western European sales of small SUVs are forecast to more than double to nearly 1 million by 2020, according researchers at IHS Automotive.
"These cars have hit the zeitgeist of the European market," IHS analyst Tim Urquhart told Automotive News Europe.
Renault sold 87,396 Capturs in the first half of this year, according to figures from JATO Dynamics. That exceeds the 2014 full-year European sales IHS predicted for the Captur last February. It also tops Renault's wildest expectations for the small SUV. "We are surprised. It was much more than we were expecting at the beginning," a company spokesman told Automotive News Europe.
The small SUV, which starts at 16,100 euros in France, is now Renault's No. 2-selling model in Europe after the Clio subcompact. It also accounted for the vast majority of Renault's 14 percent sales growth in Europe during the first half.
To keep up with Captur demand, Renault had to increase output at its factory in Valladolid, Spain, the spokesman said, without giving specific figures. Earlier this year Deutsche Bank reported that installed capacity at the plant for the car had been boosted to 250,000 from 150,000.
Rival Peugeot had to make a similar adjustment after its 2008 small SUV proved more popular than expected. In April, Peugeot announced it would increase capacity by 25 percent to 860 vehicles a day at its Mulhouse, France, factory to fulfill 120,000 orders for the car. The 2008 was second to the Captur during the first half with 73,452 sales (see chart) and is now the brand’s third-biggest seller after the 208 subcompact and the 308 compact. In the first half the 2008 played the biggest role of any Peugeot model in the carmaker’s 7 percent sales gain in Europe, according to JATO figures. The Mokka also made a huge contribution toward Opel’s 8 percent first-half sales rise in the first half.
Better margins
The popularity of the cars has allowed the French brands to play to their small-car strengths and rebuild market shares after sales of their compact and midsize models were undercut by increased competition from premium automakers. “Renault and Peugeot have always been known for manufacturing stylish characterful small cars and these models fit in very well with their self-image,” Urquhart said.
The cars’ combination of budget subcompact underpinnings and relatively high equipment and trim mix also has helped improve profit margins, the analyst said. The Renault spokesman said a little more than 60 percent of buyers in France are choosing the Captur’s second most expensive trim line, which increases the small SUV’s starting price to 19,700 euros. Many customers also are paying extra for personalized options such as two-tone paint and 17-inch alloy wheels, he added, without giving figures. The lure of strong sales and better margins means that the small SUV segment will get a big increase in competitors as Fiat, Honda, Jeep and Hyundai prepare to join the sector.
Fiat unveiled the 500X at the Paris auto show last week ahead of its 2015 launch. European sales of the 500X are forecast to be around 60,000 in 2016, which would be its first full year of sales, according to IHS. The firm predicts the 500X’s sister model, the Jeep Renegade, will account for about 25,000 sales in 2015.
Meanwhile, sales of Honda’s HR-V are forecast to peak at 30,000. Hyundai’s offering for the segment, which is likely to be called the ix25, will top 50,000 units after its launch next year, according to IHS. The firm also expects models from Volkswagen and Mazda to enter the segment before the end of the decade.
Peugeot increased production capacity for the 2008 by 25% to 860 units a day to keep up with strong demand for Europe’s No. 2-selling small SUV.
Younger buyers
A Honda spokesperson said its small SUV “should appeal to a slightly younger demographic than our flagship CR-V.” IHS’ Urquhart said that would tally with the segment, where younger buyers are seduced more by sharp exterior designs and high-tech interior features than the badge. “Styling is the No. 1 decision-making factor,” he said. He added that Ford’s decision to enter the European segment with the India-built EcoSport, which was specifically designed to cope with Brazil’s rough roads, might hurt the automaker. “If you want to sell in Europe, you need to design here. A world car is not necessarily what you need” to attract the masses in the region, he said.
Early demand, however, has been strong for the tech-oriented EcoSport, which already ranked No. 10 in the segment during the first half despite only being available in Europe for a couple of months. Ford of Europe sales head Roelant de Waard told Automotive News Europe that the company foresees strong sales for the EcoSport if demand for small SUVs starts to extend beyond France. “If that market spreads over Europe then we will have a big opportunity,” he said.
A look at 2013 European sales shows that about half of all sales of the Captur (39,628) and 2008 (28,004) came from France, according to IHS. Nationalism also plays a big role among small SUV buyers elsewhere in Europe. Customers in Germany bought 19,599 of the 70,986 Mokkas sold last year in Europe. By comparison, Renault sold just 7,514 Capturs in Germany and 6,589 in the UK.
UK buyers prefer the Nissan Juke, which is made in Sunderland, northeast England. Customer there purchased 37,488 of the 106,434 Jukes sold last year in Europe. Based on those trends IHS predicts Italy will account for the bulk of Fiat 500X sales. The firm estimates that Italy will account for 22,000 of the 57,000 western European sales of the 500X in 2016.
‘Innovative product’
While premium brands are successfully expanding into the compact segment, fewer have dropped down into the subcompact segment. One exception is Audi, which offers the A1 hatchback and plans to add the Q1 subcompact SUV in 2016.
Despite the added competition, IHS predicts that the new models will expand the segment without squeezing existing players. And while the volume brands’ subcompact and compact hatchbacks will lose sales to their small SUV siblings, analysts consider the models to be a step in the right direction for mass-market players. “They appeal to buyers who are more careful about spending money coming out of a crisis but still want road presence and the high-up position of the SUV,” Urquhart said. “It shows more mainstream makers are able to come up with innovative product that gets people into showrooms.”
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