Mountain View, Calif. - The global top 20 automotive original equipment manufacturers (OEMs) intend to reach nearly 38 models of small and compact sports utility vehicles (SUVs) in North America before the end of 2013, and more than 62 models by 2020. So far, the market is dominated by non-premium models, such as Honda CR-V, Ford Escape and Toyota RAV4, but this is expected to change as OEMs increasingly gravitate towards offering a more premium selection.

Strategic Analysis of the North American Small and Compact Sports Utility Vehicle (SUV) Market, finds that market revenue is expected to grow by more than 14.7 percent from 2012 to 2020, while unit sales are likely to increase by 35.4 percent per annum during the same period. Higher fuel efficiency of small and compact SUVs, when compared with other vehicles in the light truck segment, has made this vehicle segment the third highest selling vehicle segment in the automotive market in 2013. The small and compact SUV segment accounts for 13 percent of the market sales volume in North America and is expected to grow further as brands such as Tesla, BYD, Lexus and Lincoln, among others, enter the market by 2020.

"The new technologies introduced by these brands make compact SUVs safer, as well as more attractive, comfortable and user-friendly," said Frost & Sullivan Automotive & Transportation Research Analyst Bhavna Bhaisare. "Features such as hands-free liftgate in the Ford Escape, torque vectoring all-wheel drive and voice navigation systems, and advanced driving active safety systems make a strong case for this vehicle segment."

However, the small and compact SUVs' engine performance is inferior to other vehicles in the light truck segment, and also has low quality interiors to create a cost advantage. These vehicles will also be challenged by the growing popularity of compact multipurpose vehicles (MPVs) and the lack of business strategy clarity among some SUV brands.

"Despite the challenges, the small and compact SUV market will get a boost from the entry of new brands," added Bhaisare. "Optional, advanced features in variants of a vehicle can offset the shortcoming of the interiors, while novel technologies can be introduced to improve the efficiency and performance of the vehicle without compromising either features or performance."

Strategic Analysis of the North American Small and Compact Sports Utility Vehicle (SUV) Market is part of the Automotive & Transportation Growth Partnership Service program.