Carmakers need SUVs more urgently than we do | Business| Economy and finance news from a German perspective | DW | 11.09.2019
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Carmakers need SUVs more urgently than we do

It took social and political pressure to get the automotive industry to develop more climate friendly cars. Ironically SUVs have become an essential part of carmakers' efforts to turn green.

Electric cars certainly take the spotlight at the International Auto Show 2019 in Frankfurt. Consumers are hesitant, but manufacturers hope the new generation of vehicles will silently take the green path to the future. The true money makers, however, are hiding in the darker booth corners. Gas guzzling sport utility vehicles (SUVs) running on diesel or gas are the dirty truth of the current car market.

SUV boom continues despite climate worries

Currently, nearly one in three newly registered cars in Germany is an SUV. In all of Europe, the market share is even higher. Their success story started on wide American highways. Developed during the nineties for when the going gets tough for the luxury consumer, SUVs quickly caught on in cheaper versions. Now as the going has gotten tough for carmakers themselves in an increasingly difficult global market, the SUVs have become a source of income carmakers are relying on heavily. 

"The SUV boom isn't over yet," Audi interim CEO Bram Shot told DW in an exclusive interview. Over 3 million units were sold in Europe in the first half of the year — an increase of nearly 6%, when the overall market lost 6.7%. Shot expects "maybe another two to three years until we will see sales figures slow down."

The rising sales of SUVs is good news for the industry, because the heavy vehicles bring in much higher margins than compacts or other vehicles. And that drives an ever increasing number of new models. BMW launched the X7 model — the largest German SUV yet — earlier this year. The car is already sold out until the end of the year, according to the company. At the Frankfurt Motorshow, BMW is displaying yet another SUV model dubbed the X6. SUV sales at the Munich-based carmaker now make up over 40% of new cars — the highest rate among German automakers.

Activists fight 'monster SUVs' in Germany

For climate activists, SUVs have long been an evil they consider unnecessary.

"In a country with 99% of asphalted roads, we absolutely do not need heavy-duty off-road vehicles marketed as lifestyle products," Jürgen Resch, head of German environmental organization Deutsche Umwelthilfe (DUH) told DW.

He believes SUVs have a big part to play in the rise of CO2 emissions from cars in recent years — an issue his organization is protesting against at the main gate of the show. More demonstrations from other activist groups are planned for the show's opening weekend, some say they are even willing to block the show with illegal measures.

But it's no longer just activists the industry needs to worry about. In recent weeks, politicians have suggested various options to curb the SUV boom from outright bans in cities to heavy taxation on larger more CO2-emitting vehicles.

EU regulation increases pressure on car makers to 'green up'

The surge in SUVs may come back to haunt carmakers in Europe in 2021. That's when experts expect new EU regulation for CO2 emissions to really start biting. Regulators have come up with hefty fines if a carmakers' fleet exceeds certain emission levels. The danger of having to pay nearly 100 euro per excess gram of CO2 per car quickly sums up to huge amounts of money lost from the bottom line. For many car makers that warrants big investments into the risky realm of electrified vehicles.

Others see both SUVs and electric cars co-existing.

"One doesn't exclude the other, they can exist alongside," Audi's Shot says.

The argument that heavy and less aerodynamic cars use more gas and emit more CO2 and therefore may cancel out environmental benefits of EVs seems lost on him. Instead, he hopes the luxury carmaker has found a compromise.

"We even have an electric SUV," he says, pointing towards Audi's e-tron, the company's first all-electric vehicle that's been on the market for a few weeks now. It's a strategy many carmakers have chosen to turn SUVs somewhat greener, including Daimler with the EQC, Jaguar with its 400 horsepower I-Pace and Tesla with its Model X.

Watch video 04:09

Gas guzzlers versus the environment

'Tank-like vehicles'

There's more to the criticism than just climate worries, however. Unlike on American highways, space is a valuable good on European roads and cities. With SUVs becoming larger and wider, the discussion becomes more and more emotionally charged as people complain about SUVs taking up two parking spaces. Mercedes is about to top it all off with its new GLS model that will be too wide for standard car washes and therefore comes with extra engineering tricks that shrink the width of the car.

Why would customers in an ever more climate aware society want these massive vehicles that have been dubbed as "climate killers," "monster SUV" and "tank-like vehicles?" Stefan Bratzel from the Center of Automotive Management believes the higher seating position and easier vehicle access resonate especially with an older population, which makes up the majority of car buyers. Another aspect is security: "Psychologically, it creates a cocoon effect, a protection against the unsafe environment," he explains at the show.

A tragic accident that killed four pedestrians involving an SUV in Berlin this past weekend has brought that very security to the center of attention. While SUVs protect passengers, their hefty motorization and mass is a danger to passengers in smaller vehicles or pedestrians.

Frankfurt IAA 2019 SUV

Daimler's new GLS SUV will be too wide for standard car washes

Electric SUVs may be more unsafe

Turning to electric SUVs isn't going to solve that issue, instead, recent research suggest it might make matters worse. While combustion SUVs show the same accident risk as other car types, French insurer AXA has found that powerful electric cars (including SUVs) actually have a 40% higher accident risk, based on initial trends from claims data. Micro and small electric cars on the other hand show a slightly lower accident risk.

The insurer suspects the reason for the increased number of accidents is that once the driver hits the gas pedal, all power is available immediately electrically — the acceleration is immediate. Even the strongest and most modern combustion engine will take a moment to pick up speed. So while car makers may be able to calm some climate worries by electrifying their lifestyle off-road vehicles, they might be inviting a new discussion about the safety of these vehicles.

Watch video 02:42

Hey, car bosses, I don't need a car!

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