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For Bigger Cars, Crossovers Are King of the Road

Like a lot of showrooms across the country, the Cascade Auto Group in Cuyahoga Falls, Ohio has its share of customers these days.

The auto industry is showing strong signs of a rebound as more people are buying cars and trucks. But what they're mostly driving home might come as a bit of a surprise.

"It's the crossovers that seem to be our hottest sell right now," says Michelle Primm managing partner at Cascade.

2011 Subaru Outback
Source: Subaru
2011 Subaru Outback

"The reason is fairly simple," Primm goes on to say. "Families want stylish cars and minivans and some SUVs don't fit the bill as much. With a crossover, you get style with the utility of a SUV with the ride of a car."

"It's really the major area of auto sales growth," says John McEleney, President of McEleney Chevrolet Toyota in Clinton, Iowa. "Crossovers have a lot more appeal as people move away from minivans."

Proving their new found popularity, sales for crossovers in 2010 accounted for 24.5 percent of all vehicles sold, according to Ward'sAuto.com, a research group for the industry. Minivans were only 5.4 percent of sales while SUVs were just 6.8 percent.

Crossovers have been around since 2002 but started with just a few models and little sales. Only a bit more than 1,700,000 were sold that first year.

However, with Ford, GM, Toyota,Nissan and Volkswagen among others now in the mix, there are more than 140 versions of the crossover, giving consumers plenty of choices—while sales now average about 243,000 units a month.

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But do drivers know what they're buying?

"I personally feel that Americans don't have any idea what they are," says Joe DeMatio, deputy editor of Automobile magazine. "It started out as a marketing tool by automakers and it's worked on a certain level. It's a stupid name really, but the industry doesn't mind the confusion as long as people are buying. And they are buying."

The standard crossover definition is a vehicle built on a car platform and rides like one and yet has the features—such as higher seating and extra room—of a minivan or SUV. They also get somewhat better gas mileage.

But auto industry experts say the crossover is still a 'mystery' car.

"It seems like everything is a crossover these days and almost anything can be called one," says Jessica Caldwell, an analyst at Edmunds.com. "There's little difference between an SUV and a crossover in my mind but people are buying them up."

Some of the more popular crossover models among buyers include the Ford Flex and the Subaru Outback, according to sales figures.

The 2011 Ford Flex
Source: ford.com
The 2011 Ford Flex

The 2011 Flex seats up to seven passengers, comes with a V-6 or V-8 engine, gets up to 17 miles a gallon in the city \(24 on the highway\) and has a suggested retail price range from $29,000 to $45,000. It sits on a Ford D4 car platform.

The Outback gets 19 miles in the city, (27 on the highway) and sits on a Subaru Legacy car platform and has a suggested retail sale price range of $22,000 to $30,000.

It's this combination of car platform with a wide body and high seating that may end up confusing buyers over what they're getting—and how to use it.

"Crossovers are totally for the city and suburbs, not the 'wild west'," says Automobile magazine's DeMatio. "People have all kinds of fantasies on what they're buying and that they (crossovers) can be used for everything. They can't."

But it just may be that the confusion over what crossovers really do that keeps them selling.

"People may not know what they are or what they can do, but drivers like the room and they are generally a good car," says Edmund.com's Caldwell. "They ride better than a SUV and the cargo space is great. People want them to lug around the kids and their sports equipment and the weekend groceries. They're just not really for off road driving."

Minvans and SUVs Not Dead Yet

Even as the crossover sales boom sweeps car buyers, the demise of either the minivan or SUV is premature at best.

Both Toyota and Honda are gearing up new marketing campaigns in 2011 for their respective minivans—the Sienna and Odyssey— by emphasizing the new design changes that make them both 'cooler and sportier' looking.

And Chrysler, which is credited with inventing the minivan back in 1983, is offering a high-powered version of its 2011 Dodge Grand Caravan.

As for the SUV, its 'death' has been reported every time gas prices go up—as they are now. But they are still a strong pull for drivers.

Detroit Auto Show 2011 - A CNBC Special Report
Detroit Auto Show 2011 - A CNBC Special Report

"I insure a lot of dealers in my area and they tell me people are still buying SUVs," says Christopher Brassard, Executive Vice President of the Ten Eyck Group, an insurance and risk management firm in Albany, New York. "They tell me SUVs are just as popular as crossovers for their customers."

"SUVs are not going away," McEleney says. "Customers are very loyal when it comes to the cars they buy and most people who buy SUVs can afford them even at higher gas prices."

Whether sales of crossovers eventually 'run out of gas' and go the way of minivans and SUVs is hard to predict, say analysts. For now, crossovers are the hot item as automakers and car dealers sit back and enjoy the profits.

"The crossover is what people want and we're selling plenty of them," says Primm. "Americans need the bigger cars without the 'frumpy' look of minivans or SUVs and they fit the bill. I think they will keep selling very well in the future—until something else comes along."

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