Is it time-up for SUVs like the Toyota RAV4, Mazda CX-5 and Mitsubishi ASX? The return of the hatchback and sedan is the change experts didn't expect for decades and it's cars such as the Tesla Model 3, MG4 and BYD Seal driving it | Analysis

Something is happening in the car world that most experts didn’t think they would see.

We’re talking about a shift away from SUVs and into hatchbacks and sedans again. The proof is in the sales figures and the reason for the change is obvious.

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In 2023 SUVs sales in Australia totalled 679,462, compared to 211,361 sedans and hatchbacks - station wagons are also included in this, but the quantity is almost insignificant.

The last time sedans and hatches outsold SUVs was in 2015. That year saw a mighty 515,683 sedans, hatches and station wagons sold compared to 408,471 SUVs. After 2015, the popularity of SUVs rocketed as this practical and family friendly body style won Aussies over. The rest you know, until now.

The SUV trend is one most automotive experts thought would last for decades, when at some point a new body style would come along and win our hearts over again.

The latest car industry sales results show sales of small and medium passenger cars are up. Now, just for a bit of clarity, the industry defines a passenger car as not an SUV and not a commercial vehicle like a ute or truck – that just leaves sedans and hatchbacks, with the occasional station wagon. So now that we’re all clear on definitions, let’s look at the figures.  

The breakdown of the data is fascinating. Year-to-date sales (until the end of June) of small passenger cars under $40K are up by 35.9 per cent, while those over $40K are up 24.1 per cent. For medium passenger cars under $60K year to date sales are up 180.6 per cent and for those over $60K the figures are up 29.1 per cent.

Just to put that in context, the year-to-date sales of large sedans are nose diving and the same goes for sports cars and people movers. The sales of SUVs are generally holding steady with smaller increases of about 15 per cent for most.

So what is driving the small and medium car surge? It’s electric cars, of course. Most electric cars are hatchbacks and small sedans. 

The Tesla Model 3 is a medium-sized sedan in the over $60,000 bracket and year-to-date sales are at 10,600, which is 10 times its nearest rival in the segment, that being the petrol-only Mercdes-Benz C-Class. Also electric and in the same price bracket is the Hyundai Ioniq 6 hatch with 233 sales, the BMW i4 sedan with 1,177 sales and Polestar 2 sedan with 950 sales. 

In the medium cars less that $60K bracket the sales of the electric BYD Seal sedan are now at 4092 for the year so far, that’s compared to 85 Honda Accords sold, 283 Hyundai Sonatas, 704 Mazda6s and 590 Skoda Octavias. Camry was king with 10,788 but for how much longer?

In the small cars over $40K bracket the electric MG MG4 hatch is monstering its petrol alternatives with 2771 sales and also pulling up the total sales of a segment which has been languishing for years. GWM’s Ora electric hatch is also in this segment and had a respectable 592 sales which is more than the BMW 1 Series and halfway towards the Volkswagen Golf’s year-to-date total. 

Finally in the small passenger cars under $40K bracket the BYD Dolphin has recorded 1248 sales so far this year and to put that in context Subaru sold 1078 petrol-only Imprezas in the same time. 

So, you can see that it’s because of the arrival of these new electric sedans and hatches and their popularity that sales for these segments are up. The correlation doesn’t necessarily mean people prefer hatches and sedans, but the cause could be rooted in the affordable price point of these electric cars. In other words, many people would really like an EV but the cheapest ones mainly happen to be hatches and sedans and most of these are offered by new Chinese brands.

If you’d let me speculate further I’d suggest that we're going to see this trend rise exponentially as more Chinese brands arrive in our market. Brands like Skywell, Zeekr and Xpeng will arrive with more hatches and sedans soon. Why do Chinese brands offer mainly hatches and sedans? Well, traditonally these body styles are more popular in their home market, so they're readily available for us. That's the short answer, but the long version is a story for another day.

Is the SUV under threat? It’s hard to say, but taste and fashion is a strange psychological phenomena of human behaviour underpinned by a need to conform. If there are enough new and appealing electric sedans and hatches around us on our roads it could be tipping point to change people’s buying habits. And you can bet the car industry will pivot to that, just like it did with SUVs 10 years ago.