The market for rugged, capable off-road vehicles is booming, particularly in the United States and increasingly in China. Once a niche segment dominated by models like the Land Rover Defender, Mercedes-Benz G-Class, and Toyota Land Cruiser, it has exploded in popularity thanks to the arrival of new contenders such as the Ineos Grenadier, Ford Bronco, Rivian R1S, and GMC Hummer EV. Now, Mercedes-Benz’s two biggest rivals, Audi and BMW, are preparing to enter this lucrative market with premium challengers of their own.
The Rising Demand for Off-Road Capability
The surge in demand is undeniable. Combined sales of key off-road SUVs reached 415,007 units in 2024, up from 349,517 the previous year. Through the first nine months of 2025, the segment has already moved 371,495 units, suggesting another record-breaking year. This growth is driven by a desire for vehicles that blend luxury with genuine off-road performance—a demand the G-Class has long capitalized on.
Audi’s Entry: Leveraging the Scout Platform
Audi has long considered a direct competitor to the G-Wagen. Their approach is expected to involve sharing the underpinnings with the upcoming 2027 Scout Terra and Traveler, both developed under the Volkswagen Group umbrella. This strategic move will allow Audi to accelerate development and leverage existing hardware, including potential battery-electric and range-extender setups. However, Audi is likely to boost power output to justify a higher price point and align with its premium brand positioning.
To avoid tariffs, the Audi off-roader may be assembled at Scout’s new factory in South Carolina, potentially launching around 2030. This avoids the complications of building in Europe and exporting to the US.
BMW’s Approach: Modified CLAR Platform
BMW is also developing a G-Class rival, internally codenamed G74. The vehicle will likely use a modified version of the CLAR platform shared with the X5, adapting it for enhanced off-road capability. While BMW lacks Audi’s rally heritage, its engineering expertise is more than capable of creating a competitive vehicle. Like Audi, BMW will likely produce the model at its South Carolina plant.
The Powertrain Debate: Electric vs. Combustion
Given the slow uptake of the all-electric Mercedes G580, Audi and BMW are expected to offer both combustion and hybrid powertrains. While electric versions may find traction in China, where rugged EVs are already popular, demand for traditional engines remains strong in other markets. Offering a variety of options will ensure broader appeal and cater to diverse consumer preferences.
The entry of Audi and BMW will significantly increase competition in the premium off-road segment, potentially lowering prices, driving innovation, and providing consumers with more choices. The long-held dominance of the G-Class is about to be tested.
