Why SUVs Are Dominating The New Car Market In Australia | RACV

They cost more, are less fuel efficient, and often handle much worse than a people-mover. So why are SUVs dominating the new car market?

The sales numbers don’t lie. The SUV is now Australia’s favourite passenger vehicle.

While three-box passenger sedans like the Ford Falcon and Holden Commodore once took pride of place in our driveways and on our highways, high-rise wagons are these days the go-to choice.

The trend has been with us for a least 20 years and has accelerated in the last 10.

Back in 2000, the official VFACTS sales number for what was then officially dubbed all-terrain wagons was 105,510.

In 2011, now known by the US-inspired Sports Utility Vehicle sobriquet, sales had more than doubled to 244,136. By 2021, they had more than doubled again to 531,700 to claim more than 50 per cent of the market.

So why have Australian new vehicle buyers gone SUV-mad?

“It’s part logic and part emotion,” asserts Ross Booth, the global chief of car valuation experts Redbook. “SUVs appeal to the head and to the heart.”

Are SUVs more style than substance?

The logical bits welcomed by the rational side of the brain include functionality and perceived safety. 

The emotional bits? Well, that more plays into the origin of SUVs as ‘go anywhere adventure’ machines. In terms of self-image, it’s certainly more empowering to drive a vehicle like this than, say, a people-mover.

Sure, for many families a people-mover would actually make more sense because they do a better job of fitting and carrying people and stuff than an SUV or traditional passenger car. But nothing says urban servitude more than a people-mover and judging by their minute sales, Australians aren’t interested in that.

But the reality is that many SUVs on sale now have little more off-roading ability than the passenger cars or people-movers they have usurped. While SUVs trace their origins back to WW2 Jeeps and – more specifically for Australians - generations of Toyota LandCruisers, they have evolved to something far more car-like.

Where a ’Cruiser has a body that bolts to a ladder frame to help provide the extra wheel travel critical off-road, 4x4 drive to all four wheels and a second set of low-ratio crawler gears to scramble up and down steep mountains, most modern SUVs are built around the monocoque concept that integrates frame and body in one just like a passenger car.

Virtually none have low-range gearing and a significant percentage drive only two wheels. Many of the smaller more affordable SUVs don’t even offer an all-wheel-drive option. Their main link to off-road origins is a little extra suspension clearance and tough-looking cosmetic body cladding.

When the tax break 4x4s enjoyed against their passenger car alternatives was equalised by the federal government, it instantly made 4x2 SUVs more affordable and helped increase the popularity of SUVs, allowing buyers access to models like the Honda CR-V, Nissan X-Trail and Toyota RAV4 at a cheaper price point.

“Another key factor was the rise in popularity of novated leasing,” explains Mazda Australia marketing director Alastair Doak. “It meant people could choose what car they wanted as part of their salary package rather than just being handed a Falcon or Commodore.”