Car Makers moving into the small SUV market

Times are tough for almost all of Europe’s carmakers, but this week’s Geneva motor show has seen firms scramble for the one segment of the market still defying economic gravity – compact sport utility vehicles.

It is believed that Europeans are expected to buy almost 290,000 small SUVs this year according to IHS Automotive, which is nearly double what was sold last year.

The Juke by Nissan is being joined by Renault’s Captur and the Peugeot 2008.

For Peugeot, the launch of the 2008 is a key part of its recovery plan to break away from its European markets and concentrate on Asia and South America.

The reason why car firms are switching to SUVs is purely because their profit margins are higher.  Even though the production costs are largely the same as traditional small hatchbacks, they normally have a higher retail price.

The Peugeot 2008 will cost upwards of £13,000 (15,000 euros) whilst the 208 hatchback starts at £10,500 (12,000 euros).  So far, it’s a price some of Europe’s consumers seem happy to pay.

The new car has been created with a world market in mind, the product of designers in France, China and Brazil and it will be built in all three countries.

Yet apart from SUV sales, Europe’s car firms are struggling.   Across Europe customers have been delaying purchases, worried about rising prices, falling real wages – and whether they will still be in work this time next year.

Car sales across the European Union fell 8% last year to a 17-year low, and manufacturers do not expect things to be any brighter this year with EU car sales expected to drop a further 6%.