The luxury market for SUVs and autos -- brands with an average base price more than $30,000 -- together hit unit sales of 2.16 million in '97, up 16%. Of that, the 51 auto brands in that group accounted for unit sales of 1 million, up 5.4%, compared with 1.16 million for 20 luxe SUVs, up 27.1%, according to Ad Age sibling Automotive News.
That's a flip-flop in one year within the luxe group: SUVs moving up from 48.8% to 53.4% of this market. Several vans and high-price pickups were not included in the stats. Had they been, trucks would have had an even larger portion.
SPENDING ON THE RISE
Media have benefited from growth in the luxury categories: The 10 best-selling SUVs drew $274 million in media last year, up 9.6%; luxe cars were backed with $301.6 million, up 10.9%.
Boomers are fueling sales in this high-end segment. They are the most image-conscious of any generation before them, says auto expert Christopher Cedergren, managing director of consultancy Nextrend. "People will argue SUVs are bought for functionality and utility. But our focus groups state the overriding reason is image," he says.
The argument that boomers would be buying luxury cars rather than luxury SUVs if those cars had a stronger image might hold water. Both are growing, only sport-utilities are moving a whole lot faster.
"A lot of people say SUVs take [sales] volume away from cars, but the way we see it, trucks help grow the overall category," explains Joe Eberhardt, VP-marketing, Mercedes-Benz of North America.
The six-cylinder ML320, Mercedes' first SUV, debuted in September 1997. This month Mercedes adds the eight-cylinder ML430. New ones keep coming. General Motors Corp.'s Cadillac Motor Car Division launches its first SUV, the Escalade, in the fourth quarter. BMW will bring one to market in late 1999. Volkswagen and Porsche are collaborating on one by 2002.
GENERATION X INFLUENCE
Given the myriad high-end entries, it seems apparent yesterday's luxe SUV may not be tomorrow's. Generation Xers are expected to be more demanding, since they have grown up with computers, and can research their purchases more easily. Buyers are seeking SUVs "you don't see in every driveway," says Ken Lin, product planner, Toyota Motor Sales USA's Lexus Division.
These fancy SUVs are wooing a range of newcomers. Ford's Lincoln-Mercury division says 66% of Lincoln Navigator buyers had not shopped the Lincoln brand before. Mercedes says 80% of ML320 buyers came from other brands, and 40% drove other SUVs. Two-thirds of Lexus RX300 buyers are new to Lexus. The RX300, introduced in March, is Lexus' overall top seller.
Mr. Cedergren is cautious about automakers' continued reliance on SUV sales for unbridled growth and profit. The next popular model type could be a concept not yet developed, or a redo or reinterpretation of a sedan to meet GenX expectations, he says.