The auto luxury crossover battle is heating up

September 16, 2013: 1:58 PM ET

Luxury automakers once viewed the SUV and its lighter-weight heir, the CUV, with disdain. Now, the likes of Bentley and Rolls Royce have changed their tune in a big way. Here's why.

By Doron Levin

Jaguar CX17

Jaguar C-X17

FORTUNE -- No longer is the world of ultra-luxury cars off limits to crossovers or CUVs. Bentley and Rolls Royce, the ultimate names in stuffy high-end transportation for one-percenters, are working on variations of the sport utility vehicle.

Jaguar is too. It showed its C-X17 concept last week at the Frankfurt Auto Show.

Who's next? Ferrari? No official word from Maranello. I'd bet my last nickel, however, that the maker of Italian exotics, supercars, and F1 racers is busily and quietly working on a design.

The reason is simple: Economics. The market for sports coupes simply doesn't generate enough revenue to support the eye-wateringly high cost of research and development for advanced fuel-efficient engines, electronic gadgetry, and cutting-edge materials such as carbon fiber.

Makers of luxury cars once viewed the SUV and its lighter-weight heir, the CUV, with disdain. But Cadillac gave birth to the Escalade, Lincoln (F) hatched the Navigator and, perhaps most importantly, Porsche in 2002 introduced the Cayenne. The anguished wails of Porsche purists could be heard from the brand's home in Zuffenhausen, Germany to Pebble Beach, California and beyond.

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To create a new 911 sports car, Porsche executives explained patiently, the company needed the customers that Cayenne would bring to its showrooms.  In 2011, Porsche introduced the latest series of its sports car, the 991.

"I point out to Porsche purists that the brand might not exist today if it wasn't for Cayenne," says Michelle Krebs, a senior analyst for Edmunds.com, the automotive website. "CUVs of all sorts are popular and represent the fastest-growing segment in the U.S., China, and Europe."

Karl Brauer of Kbb.com says, "Jaguar has never offered a CUV, which has held the brand back even as the segment expanded and competing luxury brands cashed in over the past 15 years. Now, with the financial support of parent company Tata, Jaguar has the backing to develop new, lightweight platforms utilizing high-tech manufacturing processes."

Volkswagen, which owns Porsche and 11 other car brands, has been a trendsetter, pushing its designers to imagine up-to-the-moment versions for brands such as Lamborghini and Bentley, including crossovers.

Last year, Bentley showed its EXP9 concept in Geneva, complete with 23-inch wheels and enormous air intakes reminiscent of a jet fighter. A Lambo CUV was scrubbed at the last moment, according to published reports. VW, by dint of its large number of brands, can share engineering costs and engines, bringing even a small-volume $200,000 car into the realm of feasibility.

BMW this November is introducing a new, technology-packed version of its X5 crossover that it nicknames "the boss." The idea is to surpass sales of Mercedes-Benz's M-Class crossovers. Selling for $53,000, the new X5 version will feature night vision and a system that will allow the car largely to drive itself in heavy, low-speed traffic.

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Crossovers or CUVs got their names because they are built on car architectures, as opposed to SUVs, which were based on trucks. A few of the latter are still capturing a slice of the market, notably Cadillac's Escalade. The newest version of the big luxury vehicle, based on General Motors' (GM) newest truck platform, will debut in New York in October.

At one end of the automotive world, cars are getting lighter, more fuel efficient, and less expensive. At the other end are the CUVs, for the affluent who still need a suitably elegant means of transporting kids, dogs, and saddles to the summer place.

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