Hello @stedylan,
There is no current support from NXP to use KVM in the S32G3, I'm sorry for the inconveniences. In theory the A53 cores could support KVM (as mentioned in this article https://lwn.net/Articles/557132/) but the implementation should be on your side.
What I can recommend is to try using the ubuntu build, you follow the steps in section 3.1.3 BSP Ubuntu Build of the user manual [Linux BSP 40.0 User Manual for S32G3 platforms], you might be able to enable KVM more easily in that configuration.
If the KVM is not specifically required I can recommend also traying Linux containers, you can learn more abut them in section 24 Virtualization of the same document. And the Xen Hypervisor you have already mentioned.
Again, I apologize for the inconveniences.
Let me know if this information was useful.