The "sweet spot" in the U.S. premium new vehicle market right now, at least from a volume standpoint, is the compact crossover category. Small luxury CUV registrations have jumped almost four-fold over the past five years, with almost 75,000 being delivered in the first five months of 2013. The segment's share of industry has reached 1.15% and small luxury crossovers now account for more than one of every 10 luxury registrations (with all luxury crossovers together making up a third of the luxury market). Much of the segment’s growth is attributable to the increase in the model count from three in 2008 to eight now. When the X3 and RDX connected with consumers back in 2006 and 2007, the other luxury makes had little choice but to follow.
Two of the eight small crossovers now on the market, the Acura RDX and Audi Q5, are the top sellers for their respective makes (based on May 2013 CYTD total registrations) and two others, the Land Rover Evoque and Volvo XC60, are runners-up.
While the small luxury crossover concept will continue to gain favor, its growth will most likely be blunted somewhat by the introduction in the next 24 months of even smaller sub-compact crossovers such as the Mercedes-Benz GLA and Audi Q3. Over time, this emerging subcompact category will grow as well in keeping with the OEMs' need to meet strict federal CAFÉ requirements.
Going forward, luxury makes that want to remain competitive will have to be in the compact premium CUV category. Lexus, Infiniti, Lincoln and Porsche will all be launching new small crossovers in the next 18-24 months. With this in mind, Polk forecasts that this category's market share will reach 1.18% for all of 2013 and climb to 1.44% next year. Its growth will moderate after that but the segment will continue to be an integral component of the luxury industry for the foreseeable future.
Posted by Tom Libby, Senior Forecasting Analyst, Polk (07.16.2013)