Why have models like the Honda CR-V, Ford Escape and Toyota RAV4 become so popular?
One big factor is the versatility and space small SUVs and crossovers offer compared to the traditional car. At the same time, many small utility vehicles now come with smaller, more fuel-efficient engines, so consumers don't feel like they're buying a vehicle that will hurt them at the pump.
"Given how well compact utilities meet consumer functionality and fuel-economy needs, smart automakers have leaned into the segment and benefited from significantly higher revenue and margins, Krafcik said.
That has created an unusual situation where small utility vehicles, despite heavy demand, also have some of the biggest incentives in showrooms.
"Small utility vehicles have become very popular," said Truecar's Eric Lyman. "However, there are so many of these models offered, the automakers are spending more to keep sales going."
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Truecar's analysis found the average incentive as a percentage of the average transaction price was 10 percent. That is the fifth highest percentage of the 15 model segments measured by Truecar.
"Even with greater incentives, automakers can make greater profits on small SUVs because they sell at a higher price than small cars," Lyman said.
The Honda CR-V is perfect example. The average transaction price (what consumers actually pay at dealerships) for that vehicle is $27,239—well above the average transaction price of the Civic at $20,078, according to TrueCar analysis.
The growing popularity of small SUVs and crossovers in recent years is a primary reason why light trucks (pickups, SUVs and crossovers) now make up more than half of the vehicles sold each month.
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