One Consequence of America's Increasing Fondness for Crossovers? Automakers Laughing All the Way to the Bank

Timothy Cain
by Timothy Cain

Perhaps we oversimplify it. Perhaps we don’t.

Take one Honda Fit or Chevrolet Sonic or Mazda 2, alter the exterior body panels, clad the wheel arches or bumpers in a modest amount of black plastic, periodically route power to the rear wheels without any fancy AWD systems, elevate the roofline, and increase ride height just a bit. Use a typical small car engine, the same transmissions, and many of the same interior bits.

The result: HR-V, Trax, CX-3. Call it a crossover. Dare even to call it an SUV.

And then, according to Kelley Blue Book, charge customers $7,700 more for the privilege.

The fact that automakers are now routinely selling more SUVs/crossovers than cars is only part of the equation. Utility vehicle market share now stands at 41 percent in the United States. Through the first half of 2017, that means SUVs/crossovers outsold cars by roughly 350,000 units.

But as KBB’s Jack Nerad tells Automotive News, “A taller vehicle isn’t significantly more difficult to manufacture than a shorter vehicle such as a sedan.” Thus, a hefty percentage of those 350,000 additional sales came with little extra cost to manufactures and a whole lot of extra cost to the customer.

With average transaction prices of $24,411 in June 2017, subcompact crossover transaction prices weren’t just higher than subcompacts. They were 19-percent higher than the ATPs on compact cars, according to KBB, and very nearly on par with midsize car transaction prices.

Move one rung up the ladder to compact SUVs/crossovers such as the Nissan Rogue, Honda CR-V, Toyota RAV4, and Ford Escape and average transaction prices rose 1 percent, year-over-year, to $28,355 in June 2017. That’s 39-percent higher than the ATPs on the compact cars with which many of these vehicles share a platform and 13-percent higher than the ATPs on the midsize cars with which we so often assume they compete.

Then there are the midsize SUVs and crossovers such as the Toyota Highlander, Honda Pilot, and Ford Explorer, vehicles that require $37,572 expenditures on average, a substantial 2-percent year-over-year increase in the average transaction price in the segment. That’s 50-percent more than the ATP on a midsize car; 9-percent more than the ATP on a full-size sedan.

U.S. auto sales are down 2 percent through the first-half of 2017, but SUV/crossover volume has actually grown 6 percent, year-over-year, compared with 2016’s record results. It’s the car sector, with the much lower cost-to-customer, that’s bringing industry-wide volume down. Compared with 2016, car volume is down by roughly 422,000 units in early 2017.

Thus, as automakers lose 70,000 passenger car sales per month, automakers pick up about half that many SUV/crossover sales, plus about 8,500 full-size pickup truck sales per month, as well.

Trading deeply incentivized purchases of $20,465 compact cars for sales of $24,411 subcompact crossovers or $28,355 compact crossovers ain’t bad at all. And for the few automakers that make hay off $46,811 full-size pickup trucks, well, that’s gravy.

[Images: General Motors]

Timothy Cain is a contributing analyst at The Truth About Cars and and the founder and former editor of Follow on Twitter @timcaincars.

Timothy Cain
Timothy Cain

More by Timothy Cain

Join the conversation
2 of 52 comments
  • Stingray65 Stingray65 on Jul 25, 2017

    We should be happy that automakers have figured out a way to make bigger profits by offering car based crossovers - without profits they go bankrupt - except for Tesla apparently. I expect the profit difference is even bigger than the article suggests, however, because the car versions almost certainly have greater "cash on the hood" than the crossover equivalents.

  • Zackman Zackman on Jul 25, 2017

    First thing: TTAC, PLEASE fix the wiggy login issues. It's a real pain. Thank you. Now for the subject at hand: Although I prefer a nice car, I like the taller cars like my Impala - once you reach a certain age, like it or not, it is just plain easier to get in and out of. I don't have knee issues, but am feeling the effects of aging, and a tall vehicle like my car is pretty good, but taller is better, hence the CUV. I have no problem with CUVs, Wifey's 2015 CR-V isn't something I'd really want to drive for my own ride, but it gets upper 20s mpg around town, compared to my 20 mpg. I know I have to feed those 300 horses, and usually fill up every week and a half compared to every 3½ days up to four months ago, so CUVs have come a long way and are no longer gas hogs compared to 15 years ago, if I compared it to our old 2002 CR-V. Still, I've said this perhaps a few times already; when it is time to replace my ride, I'd still prefer a car, but who knows? If the OEMs are laughing all the way to the bank, good for them. Like it or not, we have come to live in a sea of taller vehicles on the road, and increasingly it's like being in an old MG Midget between a convoy of semis! Not a comfortable place to be, so I understand why the world of personal vehicles has grown taller. Might as well embrace the future for what it is.

  • Bkojote Allright, actual person who knows trucks here, the article gets it a bit wrong.First off, the Maverick is not at all comparable to a Tacoma just because they're both Hybrids. Or lemme be blunt, the butch-est non-hybrid Maverick Tremor is suitable for 2/10 difficulty trails, a Trailhunter is for about 5/10 or maybe 6/10, just about the upper end of any stock vehicle you're buying from the factory. Aside from a Sasquatch Bronco or Rubicon Jeep Wrangler you're looking at something you're towing back if you want more capability (or perhaps something you /wish/ you were towing back.)Now, where the real world difference should play out is on the trail, where a lot of low speed crawling usually saps efficiency, especially when loaded to the gills. Real world MPG from a 4Runner is about 12-13mpg, So if this loaded-with-overlander-catalog Trailhunter is still pulling in the 20's - or even 18-19, that's a massive improvement.
  • Lou_BC "That’s expensive for a midsize pickup" All of the "offroad" midsize trucks fall in that 65k USD range. The ZR2 is probably the cheapest ( without Bison option).
  • Lou_BC There are a few in my town. They come out on sunny days. I'd rather spend $29k on a square body Chevy
  • Lou_BC I had a 2010 Ford F150 and 2010 Toyota Sienna. The F150 went through 3 sets of brakes and Sienna 2 sets. Similar mileage and 10 year span.4 sets tires on F150. Truck needed a set of rear shocks and front axle seals. The solenoid in the T-case was replaced under warranty. I replaced a "blend door motor" on heater. Sienna needed a water pump and heater blower both on warranty. One TSB then recall on spare tire cable. Has a limp mode due to an engine sensor failure. At 11 years old I had to replace clutch pack in rear diff F150. My ZR2 diesel at 55,000 km. Needs new tires. Duratrac's worn and chewed up. Needed front end alignment (1st time ever on any truck I've owned).Rear brakes worn out. Left pads were to metal. Chevy rear brakes don't like offroad. Weird "inside out" dents in a few spots rear fenders. Typically GM can't really build an offroad truck issue. They won't warranty. Has fender-well liners. Tore off one rear shock protector. Was cheaper to order from GM warehouse through parts supplier than through Chevy dealer. Lots of squeaks and rattles. Infotainment has crashed a few times. Seat heater modual was on recall. One of those post sale retrofit.Local dealer is horrific. If my son can't service or repair it, I'll drive 120 km to the next town. 1st and last Chevy. Love the drivetrain and suspension. Fit and finish mediocre. Dealer sucks.
  • MaintenanceCosts You expect everything on Amazon and eBay to be fake, but it's a shame to see fake stuff on Summit Racing. Glad they pulled it.