It's The Year Of The Crossover

One clear message from April U.S. automotive sales numbers: cars that aren't cars are moving off lots a lot faster than cars that are. Yes, with SUV's on the move, it feels like the late ’90s all over again. Well, almost. Back then, SUVs were actually trucks with a different hat: they were a two-box setup on a pickup-truck ladder frame. Today, SUV pretty much means a crossover, a unibody vehicle that is basically a car. Which means today’s SUV is more fuel efficient. Make that way, way more fuel-efficient, thanks to new materials, new engine configurations, and new powertrain technology. The old Explorer of, say, 1999, has more in common with a bread truck than it does with the current Explorer. 

If this is the year of the crossover, and especially the compact crossover, the incredible shrinking minivan market will pay the price. With gasoline prices a lot lower, automakers' redoubling efforts to turn crossovers into omni-lifestyle vehicles, including by bringing more three-row vehicles into our midst, Millennials with kids have too many options to get stuck in a car their mom drove. 

Last month, the Nissan Murano enjoyed a 73% increase in sales. Jeep Cherokee, Toyota RAV4, Chevrolet's Equinox, Hyundai Santa Fe, Subaru Forester, were all up over 20%. These numbers helped trucks account for 54% of total U.S. industry sales, making April the 20th straight month that trucks outsold cars. Yes, it’s ironic: CUV's, as I said, aren't really trucks, but what's in a name. I'm typing this on a mobile device, since I'm in a coffee shop. But it has a keyboard. What is it? Who knows. Daimler Chrysler was more prescient than we knew back when they called its Pacifica sports utility albatross a “segment buster.” 

The big winner this year will probably be compact crossovers, for reasons obvious to anyone with five seconds to look at demographics: Boomers are empty nesters now, and urban Boomers want their vehicles like their buildings: a small footprint, but with a lot of space and flexibility upstairs; Gen Y, the other boom generation, is just starting families, and they want the same thing. And all of that demand is being fueled by cars like the new Lexus NX, Chevy Trax, and Jeep Renegade. 

TrueCar, Inc. predicts that, this year, compact utility vehicles will, for the first time, be the biggest vehicle segment in sales volume. The firm says the segment reached 15.6% of total U.S. auto sales in the first quarter, grabbing the crown from compact cars, which accounted for 15.1%, and midsize cars at 14.7%. The company also says compact utilities' market share has grown by 12.4 percentage points since 2000, when compact SUVs were 3.2% of deliveries.

TrueCar said something interesting: With fuel prices down, and compact crossover capacity way up, the segment has also seen double-digit discount growth over the past 12 months. Says TrueCar's report, “When gasoline experiences a notable price drop, compact utility incentives rise. Since the segment is a large revenue generator with strong margins, automakers prioritize retail incentives over fleet sales to drive volume.” Whether those incentives stick around is another question entirely. Buy now.

Next story loading loading..