Demand for subcompacts in Europe will peak this year, analysts say, as competition from small SUV/crossovers slowly starts to erode sales in the region’s most popular segment. Overall subcompact volume is forecast to reach a five-year high of 3.2 million this year, according to analyst IHS Automotive, up from 3.13 million in 2015. Starting 2017, however, IHS sees a gradual decline in demand for the segment (which is dominated by hatchbacks but includes some wagons and sedans) with the volume forecast to fall to 2.7 million by 2022 as customers migrate to different body types.
The biggest competition for subcompacts such as the best-selling Ford Fiesta and the No. 2 Volkswagen Polo is coming from similar-sized crossovers and SUVs. In the first quarter, regional sales of subcompacts grew the least out of all the traditional segments, rising just 2 percent. Over the same period demand for subcompact crossovers grew 27 percent, figures from market analysts JATO Dynamics show. The boom for small SUVs shows no signs of slowing down. In 2011 the segment accounted for Europewide sales of a little more than 168,000 while last year 1.04 million small SUVs were sold. IHS Automotive predicts sales in the sector will double by 2022 as automakers such as Volkswagen brand, Seat and Skoda as well as Hyundai and Kia add subcompact SUV/crossovers.