FCAI realigns SUV, commercial vehicle segments

How many buyers in the market for a well-equipped SUV compare the BMW X1 with the Jeep Grand Cherokee?

Not many, we figure, which is very likely why the Federal Chamber of Automotive Industries (FCAI) has established new market segmentation parameters in VFACTS for the sale of SUVs. The changes to the SUV segments bring them closer to the passenger-car segments — divided by pricing thresholds in some cases.

There is a problem however, as explained by Senior Manager for Corporate Communications at Mercedes-Benz Australia, David McCarthy.

"One of the issues with this is that an important part of market planning and forecasting is historical data," McCarthy explained to motoring.com.au today. "And as you move segments around, and you put vehicles in and take vehicles out, you end up with historical data that isn't historical."

VFACTS segments have been contrived to draw a line in the sand — a line that may not bear any logical correlation to the parameters buyers use to decide on the vehicle they will purchase. A Jeep Grand Cherokee that is close in size to the Ford Territory and Toyota Kluger has not traditionally been a marketplace rival to the Ford and Toyota, because it has been priced well above them and has been a 'Luxury SUV, rather than a 'Medium SUV'. Even though the Grand Cherokee at entry level is now priced much closer to the Territory and Kluger, that distinction between the Jeep and the other two may remain, in the new segmentation regime.

Why? Because the choice of allocating the Grand Cherokee to one segment or another remains in the purview of Chrysler. If Chrysler chooses to say the Jeep is an 'SUV Medium <$60k' or an 'SUV Large >$70k', it may do so, even though the Grand Cherokee's starting price is well below either price threshold and its external dimensions may not approximate the median for the respective segment. And Chrysler has been demolishing the competition in the former 'SUV Luxury' segment. The importer is not very likely to want to transfer its big-fish sales into a bigger pond, where it may come up against even bigger fish — and lose the bragging rights of being the top-selling vehicle in its segment.

Conversely, the compact SUV segment is full to bursting with cars that aren't logically direct competitors. The very 'urban' Mitsubishi ASX is one, as is the very bush-ready Suzuki Grand Vitara — and there are plenty of others falling in between.

Complex stuff, isn't it? But for the industry it's a necessary evil. McCarthy argues that analysing VFACTS data without historical trending is pointless and in the light of the new segmentation it's made just that much harder.

"In terms of the industry... it means the historical data is no longer as relevant. [And] Whilst you might say that the new segmentation makes more sense, in three years time will it change again? It makes it harder to do historical comparisons and to look at what the sales performance of a particular vehicle is. You're going to have to look at five years of this data and then two years of that data..."

Using passenger-car examples to illustrate, McCarthy questions whether Ford's EcoBoost Falcon will be considered a 'medium' passenger car when it arrives. The precedent he uses to support that is the case of Toyota's Camry and Aurion, essentially two cars the same size and built on the same platform, but with one significant distinction to justify their differing segmentation: engine size.

At some point in the future — it's actually happening already — certain light-segment cars will out-grow small cars and, in turn, small cars will begin to overshadow mid-size cars. It was so much easier 50 years ago, when the market comprised large cars, small cars, sports cars, all-terrain wagons, vans and pick-ups.

Arguably this shake-up is the bitter pill the industry had to swallow. Hopefully it's the full-strength pill and not a placebo. There's a need among SUVs to clean up anomalies that are rife. For instance, the 'medium' Pajero that is just 50mm shorter than the 'Large' 200 Series LandCruiser, or the 'medium' Hyundai Santa Fe that is 5mm shorter than the 'compact' Mitsubishi Outlander. And that 'compact' Outlander is the donor design for the 'medium' Peugeot 4007 (see pictures).

Three of the previous four SUV segments (Compact SUV, Medium SUV and Large SUV) are now divided into upper and lower pricing tiers that apply in each sector of the SUV market. A new segment, SUV Small < $40k, comprises small SUVs under $40,000, which will include Ford's upcoming Kuga through to Volkswagen's Tiguan. Complementing that is the new upper tier segment, SUV Small >$40k. Vehicles in this segment will include the previously mentioned BMW X1 and doubtless Audi's yet to be released Q3. The BMW has been previously allocated to the SUV Luxury segment, up against such comparable entries as the Range Rover Vogue and the Mercedes-Benz R-Class.

The former SUV Medium segment is also broken in twain, but around a price threshold of $60,000. Car companies marketing larger 'medium' SUVs may choose to move them — the likes of Ford Territory, Toyota Kluger, Jeep Grand Cherokee, Mazda CX-9, Mitsubishi Pajero, etc  — into one or other of the two SUV Large segments. Most of these vehicles would be below the $70,000 price threshold, leaving presumably the 200 Series Toyota and the Nissan Patrol occupying the segment above $70,000.

Alternatively, given the external dimensions of the Toyota LC200 and the Patrol, these two might migrate to the sub-$100,000 Upper Large segment, leaving the band above $100,000 to Lexus LX570, Range Rover Vogue, Mercedes GL and the like. Both these segments have grown out of the former SUV Luxury segment.

The FCAI has also rationalised commercial vehicle segments. Light Buses are now divided by seating capacity — more or less than 20 seats — and vans are now distinguished by their gross vehicle mass (GVM), based on a 2.5-tonne threshold. Vehicles such as the Hyundai iLoad are now in the higher-weight segment and the Renault Kangoo appears in the data for the lower segment.

New VFACTS Segmentation (SUVs, Commercials)

'SUV Compact' is now 'SUV Small < $40K' or 'SUV Small > $40K',
'SUV Medium' is now 'SUV Medium < $60K' or 'SUV Medium > $60K',
'SUV Large' is now 'SUV Large < $70K' or 'SUV Large > $70K',
'SUV Luxury' is now 'SUV Upper Large < $100K' or 'SUV Upper Large > $100K',
'Light Buses' is now 'Light Buses < 20 seats' or 'Light Buses > 20 seats',
'Vans' is now 'Vans/CC <= 2.5t' or 'Vans/CC 2.5t - 3.5t'.

The new segmentation takes effective from this month (January 2012) and VFACTS data will published on Friday, February 3.

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