The SUV Market is projected to reach USD 1221.7 billion by 2027 from USD 885.8 billion in 2022, at a CAGR of 6.6%. Rising demand for comfort and advanced automatic safety features will drive the SUV market
With the rising increase in global vehicle sales, government & regulatory bodies such as European Commission (EC) and the United States Environmental Protection Agency (US EPA) around the world have implemented stringent emission norms for controlling CO2 emissions. Stringent emission norms have shifted the global focus towards electric vehicles, results in exponential growth for these vehicles in recent years and simultaneously for electric SUVs. Most of the automotive OEMs are launching their electric SUVs in the market. At least one or more electric SUV models are currently available in the market from BMW, Mercedes, Audi, Volvo, Jaguar, Kia, Tesla, Chevrolet, and Hyundai, and several more are working to develop and launch in the coming future. According to IEA Global EV Outlook 2021, more than 55% of announced models globally are SUVs and pickups. The potential reason for electrifying SUVs is that the SUV is amongst the heaviest and most fuel-consuming vehicles, and electrification would help to meet stringent emission targets.
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Further, advanced connected features are getting more prevalent in SUVs. Advanced ADAS features such as adaptive cruise control system, traffic sign recognition, lane departure warning system, hill assist system, pedestrian detection system, automatic emergency braking system,, blind spot detection, head up displays etc. are being offered in electric and ICE SUVs. Hyundai, Morris Garriages, and Tata Motors are offering ADAS level 1 and Level 2 features in their SUV models to attract the customers. Most of the OEMs provides ADAS features to showcase their technical capability and uniqueness of their models. The benefits of advanced ADAS features in SUVs are not limited to improving passenger comfort and convenience, but it also helps in avoiding the fatal accident. The rising demand for SUVs with advanced ADAS features to provide more comfort and safety would bring lucrative business avenues to Tier 1 suppliers from this segment.
The compact SUV is the fastest segment of SUV market as the engine size of compact SUVs are smaller compared to mid-size and full-size SUVs which results in better fuel efficiency. Further, The compact SUV offers a better view of the road compared to the hatchback and sedans because of drivers’ hips position is higher compared to other cars. The market for compact SUV is dominated by major countries of Asia Pacific such as China and India which constituted about 89% of total production in 2022. The factors attributing to the growth of this market is consumer preferences towards this segment over premium hatchback cars. Compact SUV offer benefits such as high ground clearance, upright driver seat position and better center of gravity than hatchback cars. Further, it combines the features of premium hatchbacks and SUVs at slightly higher price range of hatchback cars. Due to these reasons, the compact SUV had grown at a significant pace during Covid-19 and is expected to have promising potentials in developing countries of Asia Pacific.
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Asia Pacific is expected to be the largest and fastest market for SUVs systems growing at a CAGR of 7.2% during the period of 2022-2027. The market growth in Asia Pacific can be attributed to the rising vehicle production, increasing stringent emission norms and growing demand for comfort features especially in China, Japan and India. The huge vehicle production in China offers lucrative growth opportunity for SUVs in this region. Further, the demand of SUVs in India has been increasing significantly due to reduced gap of pricing between sedan and SUV. For instance, In 2021, the SUV segment contribution has gone up to 40% in 2021-2022, which was around 19% in 2016-2017.
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