3-row SUV market heats up as consumer demand soars: 'There is no substitute'

When the Volkswagen ID. Buzz goes on sale in the U.S., consumers may be seduced by the microbus' nostalgic design and electric powertrain. They may also become enamored with its three passenger rows.

"It's a family hauler, a people mover ... a majority of our buyers will probably be coming from mid-size or large SUVs," Jeffrey Lear, product manager of electric vehicles at Volkswagen of America, told ABC News. "We know this from doing research -- families want three rows."

He added, "Three rows were a necessity."

Only the U.S. version of the ID. Buzz comes with three rows that can seat seven. Americans have been increasingly asking for larger SUVs that can accommodate their active lifestyles and growing families and carmakers are listening. Many have expanded their lineups to cater to this "supremely important" segment, according to Ed Kim, president and chief analyst of AutoPacific.

"The fact that there are so many three-row SUV entries in the marketplace is really a reflection of millennial consumers needing a large family vehicle," Kim told ABC News. "Millennials are approaching their peak income years. If you're not playing in the three-row space, you're not addressing a huge part of the marketplace."

Three-row, mid-size SUVs are replacing what families drove years ago -- the minivan, according to Tony Quiroga, editor-in-chief of Car and Driver.

"The minivan segment has been declining steadily and that space has been picked up by all the three-row SUVs and crossovers," Quiroga told ABC News.

German carmaker BMW found new customers when it introduced its three-row SUV, the X7, in late 2018.

"A little more than half of the customers who are buying the X7 are not previous BMW owners," according to Michael Baxley, U.S. product manager at BMW. "The X7 has been very successful."

Last month BMW showed off the 2023 X7, which now features a redesigned dashboard and center console, a new curved display and a revised kidney grille. The 48-volt battery-assisted hybrid technology in the new inline 6-cylinder and V8 engines improve performance and efficiency, said Baxley. What hasn't changed? The capacious cargo space. The X7 offers 33.3 inches of legroom for third-row passengers – "plenty of room for most adults," he noted.

Three-row variants in the full-size SUV segment total about 70% of sales. Mid-size SUVs with three-rows account for 10% of the U.S. vehicle market, up from 6% in 2016, said Tyson Jominy, vice president of data and analytics at J.D. Power. That percentage is likely to rise as capacity constraints from the global chip shortage ease, he said.

"The real truth is that we may not have reached true potential," Jominy told ABC News. "Three-row SUVs can do everything a two-row can but just much more. It's a critical segment to be in."

Land Rover and Jeep have recently launched three-row SUVs to steal sales from competitors. The 2023 Range Rover, Land Rover's flagship luxury SUV, will now be sold with a seven-seat configuration -- an addition specifically designed for U.S. customers.

"The U.S. market will be one of the largest for this seating configuration and addresses the top request from owners and shoppers," Rob Filipovic, director of product planning at Jaguar Land Rover, told ABC News. "While the U.S. did request a seven-seat variant on the previous generation, the platform did not support the premium expectation of comfort and space expected on a Range Rover. With the New MLA-Flex body architecture, the requirements were designed from the start, resulting in no compromise for all passengers."

Filipovic said he expects the longer wheelbase Range Rover with three rows to make up 30% of sales. And adults seated in the rear can travel comfortably: The third row easily accommodates a 6-foot-tall individual, he said, and there are HVAC vents, charging ports, heated leather seats and LED lighting.

"When the third row is folded, it provides the largest trunk behind the second row that we have ever had on a Range Rover," he added.

Jeep now offers three SUVs with seating up to eight: the Grand Cherokee L, Wagoneer and Grand Wagoneer. Kim of AutoPacific said the move was necessary to stay competitive.

"Given how important three-row SUVs are, it's actually amazing Jeep has had incredible growth over the last 10 years without one," he said.

Jeep spokesperson Ron Kiino said the addition of three rows has increased Grand Cherokee owner retention.

"The Grand Cherokee L has boosted Grand Cherokee sales … 2021 was the best sales year in total and retail sales for the Grand Cherokee since 2000," he told ABC News.

He added, "Customer response has been extremely positive."

According to Kiino, the Wagoneer and Grand Wagoneer offer best-in-class overall passenger volume (179.2 cubic feet) and third-row legroom of 36.6 inches.

Adults, however, will have to squeeze, bend, squish and contort their arms and legs to sit in some three-row SUVs.

"There's a massive amount of variability and diversity in three-row spaciousness," said Kim. "In the Mitsubishi Outlander and Volkswagen Tiguan -- you really couldn't fit anyone more than 10 years old back there. The Wagoneer and Grand Wagoneer L -- adults can easily be comfortable in a third row for hours."

Jominy argued that the third row was designed specifically for young children.

"Most adults would never for a second ride in the third row," he said. "In a lot of cases they're temporary or an expansion row. In fact, for many automakers, even if you get leather seats, the third row is vinyl. There is no expectation that an adult will ever sit back there."

Kia and Toyota are also bolstering their three-row offerings. The third-generation Toyota Sequoia will be available this summer with a twin-turbo V6 hybrid powertrain and a sliding third row with an adjustable cargo shelf system. The feature allows the third row to slide with 6 inches of adjustment range, according to Toyota.

Kia, which has won industry awards for its Telluride SUV, revamped the 2023 model to include two new trim levels, a larger navigation screen and new exterior and interior package colors. Seventy-five percent of Telluride buyers are new to the Kia family, according to the Korean automaker.

Kim said automakers could do even more to boost sales of these prodigious vehicles: Build electric ones. The Vietnamese automaker Vinfast is entering the U.S. market with a three-row EV called VF 9. The only other three-row EV available right now is the Tesla Model X. The ID. Buzz goes on sale in the U.S. in 2024.

"Three-row SUVs are unrepresented in the electric vehicle market," Kim said. "Young people with families and who are really into tech would be interested in buying an EV."

Could Americans' obsession with jumbo SUVs also signal the arrival of four rows?

"If you don't need a steering wheel [in an autonomous vehicle], you can potentially turn the front seat around and have a couple of rows in between," Jominy of J.D. Power said. "But I don't see four rows ever being a thing."

Kim pointed out that Kia sells a four-row Carnival minivan in South Korea. "That actually exists," he said.