Sales decline in China and eased emissions rules reshape the business case

European luxury carmakers are preparing larger sport-utility vehicles for the U.S. market, betting that American appetite for big, high-margin SUVs can replace Chinese profit that has dried up. Audi recently launched the Q9, its first full-size SUV, on the roof of a New York hotel. BMW told investors in Munich this week that it is looking to make a supersized SUV for U.S. buyers. And Volvo Cars said it would introduce a larger SUV in America as part of a major portfolio revamp.

Audi’s Q9 is roughly 209 inches long, approaching the dimensions of the Cadillac Escalade at about 212 inches. The standard Q9, powered by a three-liter V6 engine, carries a starting price of $87,700. A $118,000 “SQ9” variant, aimed even more squarely at North America, uses a four-liter V8. Audi, which does not have a U.S. factory, builds the Q9 in Slovakia. Vehicles imported from the European Union into the United States face a 15% tariff imposed by President Trump. Deliveries begin in November.

European luxury brands, including Volvo, appear to be targeting the same market segment as the Cadillac Escalade and Ford Motor’s Lincoln Navigator. “Americans love big SUVs. So why don’t we listen to that?” Volvo Cars Chief Executive Håkan Samuelsson said in an interview. Volvo’s plant near Charleston, South Carolina, has lots of spare capacity that the Swedish company is eager to fill, Samuelsson said, after the company bet heavily on building EVs that produced too little volume. “We need to build other cars in the factory,” he said.

BMW’s Spartanburg, South Carolina, plant is running at full capacity. The company is likely to shift production of its smaller X5 SUV to Europe to make room for the new full-size model, according to a person familiar with its planning. Moving production closer to regional demand would also help BMW manage tariff costs.

The pivot reflects a deeper economic shift. European luxury brands — BMW, Mercedes-Benz and Audi owner Volkswagen — once derived as much as half of their profit from China. Profit from China has dried up as Chinese home prices have fallen and as digitally savvy local competitors have taken share. The United States has taken on outsized importance as a result.

President Trump’s easing of U.S. emissions standards has strengthened the case for launching bigger SUVs in America. Under the new rules, automakers no longer need to sell as many fuel-efficient vehicles to offset the gas-guzzling SUVs, which carry higher profit margins.

Detroit still controls the full-size luxury SUV segment. General Motors’ Cadillac Escalade is by far America’s bestselling full-size luxury SUV, with Ford Motor’s Lincoln Navigator also competing in the segment. GM shares have traded at postbankruptcy records since Trump came to office with promises to cut electric-vehicle incentives and emissions regulations. European automakers’ shares, by contrast, are trading at multiyear lows.

“Typically in the auto industry, the bigger the vehicle, the bigger the profits,” said Tyson Jominy, a senior vice president at data provider J.D. Power. “The American buyer in this space will expect the most engine they can get,” Jominy added.

The new European SUVs will not exactly replicate what Detroit sells. Cadillac and Lincoln use the traditional body-on-frame construction — a separate chassis with the cabin bolted on — also used in pickup trucks. European carmakers specialize in “unibody” designs, where the body and frame are built as a single unit. Unibody vehicles typically perform better on fuel economy and road handling; body-on-frame models tend to be favored for towing and off-roading.

The Volkswagen brand itself is an exception. According to people familiar with its planning, VW is likely to build body-on-frame vehicles such as a pickup truck and a large SUV for the U.S. market. The company is debating whether to partner with another automaker that already uses body-on-frame construction — a faster route to market — or to develop the capability with North American suppliers.

The supersized-SUV focus is part of a broader strategic shift across the European auto industry. Luxury brands once tried to sell the same cars globally. Now higher tariffs, local-content rules, diverging emissions standards and differing consumer tastes are pushing them to design vehicles tailored to their biggest markets. “The Americans and Chinese have increasingly different ideas about what a luxury vehicle is,” said Simon Schnurrer, global head of automotive at consultant Oliver Wyman.

Stephen Wilmot, The Wall Street Journal’s European autos reporter, is based in London.