SUVs start to feel the pinch as green concerns increase

The increased desire for more fuel-efficient and environmentally friendly cars has caused car makers' expectations for SUV growth in the North American market to hit rock bottom.

According to the latest KMPG survey of the global automotive industry, which garnered the opinion of top automotive bosses, just 3 per cent of American executives expect to see growth in the SUV sector this year. That figure compares with 39 per cent in Europe – down from 50 per cent last year – and 52 per cent in Asia. The loss in confidence coincides with the manufacturer executives' view that oil prices have now permanently changed consumer's buying habits.

Executives also now believe that fuel efficiency will become the single most important factor in the car buying process, ranking it ahead of traditional considerations such as build quality, safety and affordability. In the KMPG survey nearly nine in ten executives said fuel economy would dominate future buying trends.

“Issues which were once thought of as purely European concerns have now been elevated to a global level with even the US market finally succumbing,” said Mike Steventon, head of automotive at KPMG in the UK. He added: “The principal casualty of these changing preferences is the SUV. The days of the sector being a key driver of industry profitability, particularly in North America, may be coming to an end.”

Automotive bosses predict that the shortfall in SUV sales will be countered by a rise in sales of hybrid and luxury cars. More than a third of executives believe that global hybrid sales will increase from last year's total of 200,000 units to between 300,000 and 500,000 sales this year.

At odds with a growing consumer preference for fuel-efficient vehicles, 57 per cent of European executives expect luxury vehicles to increase their market share. That represents an increase up from 37 per cent last year. Nearly 40 per cent of North Americans predicted an increase – up from 10 per cent last year. The survey found that the crossover sector was also widely viewed as another potential growth market. Download the full report below.