#LuxurySuvs

We’re finally beginning to see the impact a new SUV can have in Volvo showrooms.

The second-generation XC90 posted a 209% year-over-year increase to 1,176 U.S. sales in July 2015. That equalled 796 more sales this July than last and the highest monthly total for the XC90 since December 2010.

So is Volvo back? Well, not quite. Not yet.

Because the auto market is so seasonal, year-over-year change is a valid figure to consider, but it’s less useful when the previous year in the year-over-year comparison was the 13th year in the model’s lifespan. XC90 sales in July 2014, for instance, were 88% lower than in July 2004.

In July 2015, for just the second time since arriving in America 15 months ago, the Porsche Macan outsold its bigger brother Cayenne.

Also in July 2015, for the first time since arriving in America 15 months ago, the Porsche Macan was the best-selling Porsche in America.

But is Porsche just using the Macan to appeal to Cayenne buyers who want something smaller or less expensive, thereby cannibalizing Cayenne volume in the United States?

Aston Martin DBX concept

In our post about McLaren having no interest in producing a sports car for the masses, I mentioned I didn’t ask Wayne Bruce, McLaren’s communications director, if the company was considering producing an SUV like many of the other expensive marques. Well, Mr. Bruce read the post and contacted me, saying that he wished I had indeed asked him that question because the answer goes to the heart of what the McLaren brand means to the company and to its customers. Other car companies might be well served to emulate the clarity with which McLaren understands their own brand.

Aston Martin is entering the high-end luxury SUV/crossover game, while Lamborghini is still debating whether or not the LM002 needs a successor.

Curious fact: America’s two best-selling premium brands and one of the two fastest-growing premium brands are the three premium brands which rely the least upon SUVs and crossovers in the U.S. market.

We correctly believe that much of the growth in the luxury vehicle sector over the coming half-decade will be in the CUV category, but there’s no denying that the major players established productive, popular, profit-generating passenger car lineups many years ago.

• Most new crossovers introduced in 2014 were “premium”

• Majority of Jaguar-Land Rover, Acura, Lincoln sales come from utilities

• Porsche and Cadillac generate half their U.S. volume with utilities

SUVs and crossovers are assisting these brands – BMW, Mercedes-Benz, and Audi – in finding new avenues for growth, but their car divisions are large volume tools.

The same can’t be said for many of the mid-tier and low-volume luxury brands. Cars accomplish very little for Acura and Jaguar-Land Rover, generate only half of Cadillac’s volume, and produce only 45% of Lincoln sales.

The rise of the small luxury crossover is undeniable, not just based on the most recent evidence available. U.S. sales of premium brand small utility vehicles rose 17.9% to 23,776 units in November 2014, an increase of 3615 units compared with November 2013. Much of that improvement was powered by the smallest of small luxury brand crossovers: the Audi Q3, BMW X1, and Mercedes-Benz GLA, sales of which grew to 4963 units from the 2364 generated by the X1 a year ago.

Up a notch in size/price/prestige, the Acura RDX-led category (which was topped by the Audi Q5 in each of the last three months) was up just 5.7% in November 2014, not hugely superior to the gains made by the overall industry, which rose 4.6%. But this class of SUV/crossover is up 17.8% over the span of the last eleven months. Combined with the aforementioned trio of underlings, they’ve grown 17.7% to 222,844 units.

Clearly, this is a growth market with untapped potential. These are the ess-you-vees of tomorrow, despite lacking (for the most part) off-road credentials, significant ride height, or superior utility compared with conventional, nearly nonexistent small wagons.

In the span of two months, the BMW X1 went from possessing no true direct German competition to finding challengers on two fronts.

That’s not to say the X1 was never a viable, though slightly smaller, challenger to the rivals of BMW’s own X3. But the X1 was sitting on the bottom rung of the ladder, and it’s no longer resting their on its own.

For the most part, their bigger and more expensive brethren sell more often. But this group of small luxury crossovers is gaining a smaller subset as we speak, one which will see the declining BMW X1 move over to its own category.

Meanwhile, the remaining contestants will be joined by the Lexus NX, a smaller, four-cylinder-only alternative to the Lexus RX. The RX is, by far and away, America’s top-selling premium brand utility vehicle. 9658 RXs were sold during the month of July 2014, or more than the Mercedes-Benz GLK, Audi Q5, BMW X3, and BMW X1 combined.

AutoApril2014April2013%Change4 mos.20144 mos.2013%ChangeBMW X54,3933,444+27.6%14,15315,335-7.7%BMW X33,5441,914+85.2%13,9749,125+53.1%Mercedes-Benz M-Class3,8313,280+16.8%13,96512,442+12.2%Audi Q53,2933,241+1.6%12,06711,437+5.5%Mercedes-Benz GLK-Class3,1442,702+16.4%11,41510,212+11.8%BMW X11,1301,556-27.4%9,0986,967+30.6%Volkswagen Tiguan1,9982,488-19.7%8,10910,439-22.3%Mercedes-Benz GL-Class2,2532,481-9.2%7,67110,099-24.0%Porsche Cayenne1,8391,750+5.1%6,1195,931+3.2%Audi Q71,4621,183+23.6%5,5514,084+35.9%Volkswagen Touareg597578+3.3%2,1623,102-30.3%BMW X6342354-3.4%1,4421,618-10.9%Mercedes-Benz G-Class274188+45.7%882800+10.3%—— —————Total28,100 25,159 +11.7% 106,608 101,591 +4.9%

It’s not as though consumers hadn’t experienced doses of luxury in their SUVs before the Mercedes-Benz ML, Lexus RX, and Lincoln Navigator began pushing an increasingly impressive wave toward shore in the late 90s. But, especially in the enthusiast community, there was some reluctance to accept the notion of such illustrious brands diving head first into a market that was going to demand perfectly balanced compromises. The traditional off-road ability we associated with SUVs couldn’t be thrust overboard in favour of road manners. Or could it?