The chip shortage has boosted sales of compact SUVs from volume brands as they prioritize more-profitable models.
The segment's volume rose 15 percent to 1.42 million in Europe through September, helping compact SUVs overtake the hatchback-dominated traditional compact class to become the region's third-largest segment after small cars and small crossovers, according to data from JATO Dynamics.
The compact SUV segment is forecast to become Europe's No. 1 vehicle class by year-end, according to analyst firm LMC Automotive, which expects compact SUVs to remain Europe's favorite body type until 2026.
"It is difficult to see a threat to the future of this segment," Sammy Chan, LMC senior analyst, said.
The segment, popularized by the Nissan Qashqai, has grown from a niche alternative to compact hatchbacks such as the Volkswagen Golf and Ford Focus to reliable source of high-margin sales.
Customers pay 20 percent more on average for a compact SUV than a compact hatchback, JATO's pricing data through nine months shows (37,555 euros vs. 31,392 euros).
"At the end, most of these SUVs are almost the same vehicles of their compact counterparts, just more expensive," said Felipe Munoz, global analyst at JATO Dynamics. "That is why the few semiconductors available are being used to produce these cars."