Super-premium SUVs are the next-next thing. In May, Lamborghini announced that it would be offering a super-luxury SUV in 2018. It will probably be called the Urus and unless you’re a millionaire, be ready for massive sticker-shock: well over $200,000.Lamborghini is not the only super-luxury automaker adding an SUV to its model line-up. In fact, it’s a late entrant into the SUV sweepstakes. Bentley’s super-premium SUV is called the Bentayga; Rolls Royce has the Cullinan; and Maserati, Jaguar and Aston Martin are presently toiling away on their respective SUVs.
Why the rage to produce super-premium, super-expensive SUVs?
The answer is simple: supply and demand. Everybody wants to own an SUV. So the automakers are filling the demand. SUVs and CUVs (compact utility vehicles) are arguably the most popular models available to consumers. They are certainly the fastest growing market. Experts project that by next year, SUV and CUV sales will surpass 20 million units per year.
In 2000, super-premium SUVs sold just below 400,000 units worldwide. By 2014, that number had escalated to 1.2 million units. The profit margin on super-premium SUVs is enormous. According to automobile marketing expert Ariel Avinari of Global Autosports, “The production costs of Lamborghini’s new SUV won’t be much more than the Porsche Cayenne, but the profit margin will be twice as high.”
The Porsche Cayenne was Porsche’s bestselling model in 2014, and Porsche predicts it will sell even more Cayennes this year. This success has motivated Porsche to make the next generation Cayenne, presently in development, even more luxurious and expensive.
Moreover, the Volkswagen Group, which owns Porsche, has decided that all its subdivisions, which include Bentley Motors, Lamborghini and Audi, will manufacture super-premium SUVs.
The market for these super-premium SUVs is, of course, the super-rich, who love their SUVs as much as the less well-heeled. China, with all its new millionaires and billionaires, provides the largest market in the world for super-premium SUVs, which account for a third of all China’s car sales.
In fact, luxury automakers are targeting the super-rich across the board, launching a bevy of new models, including the Mercedes-Maybach S600, the Mercedes-Benz GLA, and the McLaren P13, which goes for $185,000. None of these models is an SUV, but they are super-premium automobiles intended for wealthy car enthusiasts.
Avinari cites three reasons for the escalation of luxury car models. First, the rich keep getting richer and they want luxurious cars. And they are willing to pay for them. Second, automakers believe that having super-premium models adds luster to their brand. It’s like having Beyonce wear your dress to the Grammies. Third, the profitability of super-premium cars is high: 10% to 15%.
The only worry is that too many new super-premium models might saturate the market. But that’s iffy future-history that no one can predict. Right now, things are booming. There’s never been a better time to be rich or to shop for a luxury SUV.