Auto makers are seriously eyeing all-wheel drive as a feature that can both fill a void in buyer wants and improve profit margins.
Four- and all-wheel drive already have been growing strongly. At the current rate of increase, vehicles sold with 4WD/AWD capability should hit 40% by the end of the decade. It could reach as high as 50% by the middle of the next decade.
The 1990s surge in sales of SUVs, combined with increased demand for pickup trucks, caused sales penetration of 4WD/AWD to double from 1990 to 1998. Most of that was in less-sophisticated 4WD systems found in pickups and mainstream SUVs. In those systems, power goes to all four wheels only after the driver flips a switch. More sophisticated AWD systems automatically apportion power to all four wheels according to road conditions and usually are found on cross/utility vehicles, cars, minivans and premium SUVs. Growing use of AWD on these vehicles will keep the juggernaut going, at least for the next five years.
Except for Audi and Subaru, 4WD/AWD never has been a hot option for cars. But many luxury brands, including Lexus, Mercedes-Benz, BMW and Volvo, are increasing the number of car models available with the feature. And now some auto makers — especially Detroit's Big Three — are bringing the option to more of their mainstream cars, which could be a litmus test for the long-term future of its acceptance.
General Motors Corp. and Ford Motor Co. are putting the option on some new midsize cars due in the next several years. DaimlerChrysler Corp. is considering an AWD option for the rear-drive replacements to its front-drive LH cars.
A Ward's forecast shows sales penetration of vehicles sold with 4WD/AWD will claim nearly one-in-three vehicles, or 32%, within five years. That's up from 26.5% in 2002, and a big gain from a 22.0% share in 1998.
Many automotive executives believe aging Baby Boomers will move from SUVs back to cars or more passenger-oriented vehicles as they grow older. However, it's expected they will continue to demand AWD/4WD because they've grown accustomed to it in their SUVs.
In the near term, actual sales volume for 4WD/AWD vehicles should grow by close to 1 million units within five years, based on expected overall U.S. sales for 2008 of 17.2 million units. A jump of 20% from the 4.6 million is expected for 2003.
Sales of CUVs equipped with the feature will double and also will have the biggest volume increase of any segment, as availability of those vehicles continues to rise over the next five years. CUV share of the total 4WD/AWD market is forecast to jump to 27% in 2008 from 16.4% in 2002.
SUVs will remain the highest-volume 4WD/AWD vehicles, but growth will plateau. Pickups will grow by 10% and remain the second highest-volume segment for 4WD/AWD, but share is expected to fall from 2002's 43.4% to less than 36% by 2008.
Although much ballyhooed, installation rates in the luxury-car segment are expected to grow only by 10%, despite many more models offering the feature.
However, much of the growth over the next five years will be with premium-priced vehicles.
Sales volumes of luxury CUVs with 4WD/AWD will triple by 2008 and hold 10.5% of the market, compared with 4.0% in 2002. The Luxury SUV share of the 4WD/AWD market will rise to 5.6% from 4.4% in 2002.
