SUV Market: Shifting Consumer Preferences & Sustainability
As per Inkwood Research, the global sport utility vehicle (SUV) market is expected to grow at a CAGR of 6.08% during the period from 2024 to 2032, reaching a revenue of $1505.94 billion by 2032. The global market is rapidly evolving, and the upcoming years are expected to bring transformative changes. As consumer preferences shift and new technologies take center stage, businesses in the SUV sector are set to face new challenges and opportunities.
SUV manufacturers play a key role in driving this growth by continuously innovating to meet shifting consumer demands and adopting cutting-edge technologies. As they embrace electrification, advanced driver assistance features, and sustainable practices, they not only cater to the shifting preferences of eco-conscious consumers but also set the pace for the broader automotive industry’s transformation.
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This blog explores the evolving preferences of SUV buyers, breaks down the key market segments—luxury, mid-range, and economy or budget—particularly in developing markets like India, and examines how sustainability is influencing both consumer behavior and industry practices.
Shifting Preferences and Purchase Behavior of SUV Customers in 2024-2025
The profile of the average SUV buyer is changing as consumer demands and societal trends evolve. While traditional factors such as performance, safety, and space remain important, novel elements are set to shape customer preferences for the coming years.
Rise of Electric and Hybrid SUVs
The demand for electric and hybrid SUVs continues to grow, with 2024-2025 marking a significant shift towards eco-friendly models. An increasing number of consumers are
considering electric and hybrid SUVs for their next vehicle, driven by concerns about environmental impact, stricter emissions regulations, and the growing availability of charging infrastructure.
Notable automakers like Tesla with its Model X and Model Y and Rivian with the R1S are leading the charge in electric SUVs. Meanwhile, traditional manufacturers such as Toyota with its hybrid RAV4 Prime and Hyundai with the Ioniq 5 are expanding their electric and hybrid SUV offerings. Ford has also made notable strides with its Mustang Mach-E, while Volkswagen’s ID.4 is gaining popularity globally.
Technological Advancements as a Differentiator
SUV customers are placing an increased emphasis on technology; from autonomous driving capabilities to advanced infotainment systems, cutting-edge technology is becoming a critical factor in purchase decisions. Features such as driver-assistance systems, connectivity, and AI-enhanced safety are no longer optional; they are expected by the modern buyer.
Accordingly, automakers should focus on developing and marketing SUVs that feature advanced technological systems. Highlighting these innovations in marketing campaigns can make these models more attractive to tech-savvy customers looking for convenience, safety, and a futuristic driving experience.
Focus on Personalization and Comfort
Consumers are increasingly looking for vehicles that cater to their unique lifestyles and needs. From customizable interiors to flexible seating arrangements, personalization is becoming a strong motivator for SUV purchases. Additionally, features that prioritize comfort, such as premium seating materials and advanced climate control, are in high demand.
Offering personalized options like interior finishes, seating configurations, and enhanced technology features can differentiate brands in a competitive market. Providing customers with the ability to tailor their SUV to their preferences will appeal to buyers seeking more than just a standard model.
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Key SUV Market Segments: Targeting Luxury vs. Economy Buyers
The SUV market is highly segmented, with distinct consumer groups gravitating toward different types of vehicles. These segments include luxury, mid-range, and economy SUVs, each attracting a unique demographic. One region where this segmentation is particularly pronounced is India, where the SUV market is experiencing rapid growth.
Luxury SUV: Luxury SUVs are designed for high-income buyers who prioritize comfort, cutting-edge technology, and performance. These customers are less concerned with price and more focused on exclusivity, brand prestige, and the latest innovations. The luxury SUV segment has also seen significant growth in electrification, with high-end brands introducing electric models that offer sustainability alongside luxury.
Market Position: In 2023, the luxury SUV segment captured a notable revenue share of 15.96%; subsequently, the segment is expected to reach 16.05% by 2032.
Luxury SUV leaders like Mercedes-Benz with its electric EQB and GLE models, Audi with the e-Tron, and BMW with the iX are setting the standard for high-end electric SUVs. In
addition, Land Rover’s Range Rover continues to dominate the luxury market, with both traditional and hybrid variants that appeal to the affluent buyer.
In this regard, India’s SUV market is expanding, driven by rising incomes and an increasing appetite for premium brands. Brands like Mercedes-Benz, Jaguar Land Rover, and BMW are capitalizing on this growing demand, especially among urban professionals.
Mid-Range SUV: The mid-range SUV market is the largest globally, appealing to middleclass families and professionals who want a balance between affordability, functionality, and modern features. Consumers in this segment prioritize value for money, looking for vehicles that offer spacious interiors, good fuel efficiency, and technological conveniences at a reasonable price.
Market Position: Mid-range is expected to be the dominating price range during the forecast period, capturing the highest share of 44.02% by 2032.
In the mid-range segment, brands like Toyota with its Fortuner, Hyundai with the Tucson, and Kia with the Seltos dominate. The popularity of mid-range SUVs is driven by the balance they offer between price and features, making them a top choice for a wide range of buyers.
Economy SUV: The budget/economy SUV segment targets budget-conscious consumers who want the space and versatility of an SUV at an affordable price. Buyers in this category prioritize low running costs, reliability, and practicality, often foregoing advanced features to keep prices down.
Market Position: The budget segment is expected to grow with the fastestgrowing CAGR of 6.35% during the forecast years 2024 to 2032.
Economy SUVs from brands like Maruti Suzuki (Vitara Brezza), Mahindra (XUV300), and Renault (Kiger) are highly sought after in emerging markets. These models offer compact designs and cost-effective solutions for urban commuters.
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Key Insights for Businesses:
To attract luxury buyers, automakers must prioritize continuous innovation by integrating cutting-edge technology and sustainable solutions. Highlighting the eco-friendly credentials of luxury SUVs will resonate with affluent consumers who seek both exclusivity and environmental responsibility.
For the broader mid-range market, automakers should focus on delivering a balance of durability, fuel efficiency, and modern tech features. Offering hybrid options within this segment can effectively cater to eco-conscious buyers who want an affordable step toward sustainability without the premium price tag of fully electric models.
Meanwhile, for economy SUV buyers, practicality, low maintenance costs, and reliability should take center stage. Emphasizing long-term savings and affordability will appeal to this cost-conscious demographic, helping them see the value of ownership over time.
Sustainability in the SUV Market: A Key Selling Point
Sustainability is not just a trend but a critical factor influencing purchasing decisions in the 2024-2025 SUV market. Automakers that prioritize eco-friendly practices will differentiate themselves in an increasingly competitive industry. Here’s how –
Electric and Hybrid Models: The shift toward electric and hybrid SUVs is reshaping the industry. Consumers, especially in regions with strict emissions regulations, are actively seeking alternatives to traditional gas-powered vehicles. Automakers are responding by expanding their portfolios to include more electric and hybrid options across all market segments.
Leading Market Players: Tesla, Rivian, and Ford are at the forefront of the electric SUV revolution. The Tesla Model Y, Rivian R1S, and Ford Mustang Mach-E are leading examples of how automakers are responding to consumer demand for sustainable yet high-performing vehicles.
Sustainable Manufacturing Practices: Beyond the vehicles themselves, customers are increasingly concerned about the environmental impact of the manufacturing process. Automakers are responding by implementing energy-efficient production techniques and using renewable energy sources in their factories.
Recyclable Materials and Eco-friendly Interiors: Automakers are incorporating sustainable materials like recycled plastics, vegan leather, and eco-friendly fabrics into their SUVs. These innovations reduce environmental impact while also appealing to buyers looking for vehicles aligned with their eco-conscious values.
SUV manufacturers must prioritize sustainability at every stage of production. Clearly communicating eco-friendly practices and integrating sustainability into marketing strategies can increase brand loyalty and attract environmentally-conscious consumers.
As we move into 2025, the SUV market is transforming rapidly. Consumers are demanding more from their vehicles, whether it’s advanced technology, customization options, or sustainable features. By understanding shifting preferences, targeting the right market segments, and focusing on sustainability, businesses can thrive in an evolving market. Brands that adapt to these trends will be well-positioned to capture the attention of both luxury and economy buyers in the globally competitive SUV landscape.
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