||Smaller SUVs Appealing to Buyers
Pickups are helping to drive this year's auto sales growth, but another member of the light truck vehicle segment is also enjoying a pretty good 2013.
Compact crossovers -- like the Ford Escape, Honda CR-V and Toyota RAV4 -- grew at a faster rate than the overall industry through the first three months of this year.
These small SUVs are largely favored over the gas-guzzling full-size SUVs that were the norm a decade ago. Based on compact-car platforms, the new crossovers offer the fuel efficiency of a small car and much of the flexibility of a larger SUV.
Some automakers are trying to stay ahead through larger incentives, while others have added features to differentiate their offerings.
"It's a real sweet spot in the marketplace," said R.L. Polk & Co. analyst Tom Libby in a telephone interview.
"It's the right combination of functionality and size and gas mileage."
Sales of small SUVs totaled about 450,000 during the first quarter of this year and made up 12.1 percent of all new-car sales, according to Kelley Blue Book. That's up from 11.2 percent during the same period last year. And the crossovers have nearly doubled their market share from 2007, when they claimed 6.7 percent of the market.
Leading the charge through March is Ford Motor Co.'s all-new Escape. The Dearborn automaker sold nearly 73,000 Escapes during the first quarter according to Autodata Corp. That's up 25 percent compared to last year, and was the best quarterly stretch in the Escape's history, which dates to 2000.
Ford's gain has come at the expense of foreign automakers Toyota Motor Corp. and Honda Motor Co. Ford this year has overtaken Honda's CR-V in the segment; CR-V sales are down 12.4 percent this year to 65,374. Sales of Toyota's RAV4 are up 3.9 percent to 41,413.
Ford has made most of its gains with the Escape in California -- prime Honda and Toyota territory -- with sales up 50 percent there compared to a year ago.
Incentives lure buyers
Automakers in the small SUV segment are luring buyers with heavy incentives, said Jesse Toprak, vice president of market intelligence at TrueCar.com.
Ford is still relying heavily on sales incentives for its Escape, though not as much as in past years. Data from TrueCar.com show that Ford put an average of $2,383 on the hood of Escape vehicles in March -- down 42 percent from the more than $4,000 it offered last March to boost sales of the outgoing Escape.
But Ford's rebates and special offers are still significantly more than Toyota and Honda. Toyota spent $867 in sales incentives for the RAV4 last month, down 59 percent from the $2,114 it spent last March. Honda spent $923, up about 35 percent compared to the $685 it spent the same month a year ago.
Alec Gutierrez, senior analyst at Kelley Blue Book, said special offers have aided Escape sales, but are not the sole reason for the vehicle's success.
"Incentive spending is not going to lead any nameplate to the finish line," he said.
The Escape still has a higher average selling price than comparable vehicles in the segment, up 5 percent since last year to $28,659, according to Kelley Blue Book.
Nearly 1 in 5 customers opt for the more expensive Titanium Escape trim, which comes with a standard hands-free liftgate, a key option for the crossover.
The average selling price on the RAV4, which has an adjustable power liftgate on its high-end trim, climbed 3.9 percent to $26,822 during the same period; the average on the CR-V dropped slightly to $26,689.
Other brands stepping up
Ford, Toyota and Honda may be the big players among compact crossovers, but other brands are making huge gains, too.
Sales of Subaru of America's Forester, for example, are up 25.3 percent to 21,144 this year. Mazda's CX-5 sales are up significantly since last year and nearly hit 18,000 for the quarter.
Libby said those automakers with small SUVs will continue to see sales gains, though the market share for the vehicles overall may have topped out.
"There won't be many more entrants in the segment," he said.
Gutierrez believes the CX-5, along with Toyota's RAV4, have the most room to grow, though Mazda won't have the production capacity to match the volume of the segment's heavy hitters.
"The segment could grow as high as 14, 14.5 percent," he said. "Share has started to stabilize, but the overall outlook is very positive."
(Source: The Detroit News, 04/09/13)
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