The Crossover Craze
As automakers blur the boundaries between cars, trucks and SUVs, only two certainties remain: the rule book has been tossed out and the market loves it
Paul A. Eisenstein
From the Print Edition:
Kurt Russell, May/June 2006
Hidden in the hills, not far from the crashing surf of California's Malibu coastline, a team of 23 Volkswagen designers, engineers and planners have quietly holed up in a rented vacation house for the last 18 months. The Moonraker Project is Volkswagen's secret weapon, a central part of its effort to get a better feel for the complicated and confusing U.S. car market—and reverse a steady slide in sales.
"I was frightened how arrogant the Germans were when they came here," admits Moonraker's manager, Stefan Liske. But attitudes have changed after a year spent crisscrossing the country and meeting with consumers. Maybe it's the laid-back California lifestyle, perhaps the recognition of how much trouble VW is facing here. Whatever the reason, Moonraker members have been reaching some unexpected conclusions and taking some striking, if calculated risks. Take the concept car the team rolled out at this year's Greater Los Angeles Auto Show.
The GX3 is an unlikely amalgam of go-kart and motorcycle. Wolfgang Bernhard, Volkswagen's global brand boss, hints that the three-wheel two-seater may very well go into limited production in late 2007. But even if it doesn't, it's clear that the German automaker has concluded that the old rules no longer apply in the United States—at least not for a manufacturer hoping to stand out in an increasingly crowded market.
One only had to spend a few hours touring the L.A. convention center, or the North American International Auto Show in Detroit, to get a sense of just how much—and how fast—things are changing, and not just for VW. Roughly 100 new vehicles debuted at the two shows, considered harbingers of trends sweeping through the industry. Plenty of products fell neatly into traditional market segments, such as Toyota's next-generation Camry sedan or the big Chevrolet Suburban SUV, but nearly half the new offerings defied easy categorization. While few went to the radical extremes of Volkswagen's GX3, dozens of concepts and production models, such as the Dodge Caliber, Acura MDX and Mercedes-Benz GL, seemed intent on blurring the traditional boundaries between cars and trucks, sedans and wagons, pickups and SUVs.
Few new products have done more to blur the lines than Honda's new Ridgeline pickup. The Japanese automaker scored an unprecedented coup at January's North American International Auto Show, at which a panel of 49 U.S. and Canadian journalists not only named the new Civic the North American Car of the Year, but, more significantly, declared the Ridgeline their pick as North American Truck of the Year. But while the Ridgeline is definitely a pickup, is it actually a truck? Ever since Henry Ford bolted a bed onto the back of a Model T, the formula for building a pickup has gone essentially unchanged: weld together a ladder-like frame and attach a wheel to each corner; stuff an engine up front; mount a big box in the middle for your passengers; and then bolt on a bed for your cargo. The approach is rugged and totally functional. But Honda took a different approach, and you'll know it the moment you look at this unconventional offering with its exaggerated angles and locomotive-sized grille. Sure, the Ridgeline has a conventional power train, passenger compartment and cargo bed, but they're integrated into an overall package using the same sort of monocoque design you'd find in a passenger car, for instance the carmaker's Civic. In other words, chassis and body are merged into one—rather than the welded-and-bolted assemblage used for traditional trucks, such as the pickup segment's best seller, the Ford F-Series.
Perhaps it's no surprise that Honda took this unusual approach. After all, Honda and its Japanese rival Toyota invented the so-called crossover back in 1985. Honda was first to market in Japan, with its CRV, but Toyota landed first on U.S. shores with the RAV-4. These "cute-utes" looked a lot like conventional sport-utility vehicles. They rode tall, featured the high "command seating" ute owners relish, and boasted go-anywhere all-wheel drive. Under the skin, though, they were car-based, like the Ridgeline, and unlike conventional SUVs.
So while they looked like trucks, they drove more like passenger cars, meaning better on-road manners, improved fuel economy and a reduced risk of rollover. There were some trade-offs, of course. These new machines generally couldn't manage rough off-road trails. They were better suited to gravel and snowdrifts, but few buyers seemed to notice, nor mind. Industry studies reveal that well less than 10 percent of conventional sport-ute owners ever drive down anything rougher than a dirt road. Ironically, both the RAV-4 and CRV were born of desperation. At the time, the Big Three U.S. automakers dominated the highly profitable light-truck market. Honda and Toyota needed entries of their own, yet the sport-ute learning curve was steep. To fill the gap, each maker raided its own passenger car parts bin, cobbling placeholders that would stand in until they could ready their conventional trucks. They might not have bothered. The two cute-utes took the market by storm, and suddenly, with a new generation of crossovers threatening to make conventional trucks obsolete, Detroit was on the defensive.
BREAKING THE BOUNDARIES
"The boundaries are disappearing," proclaims David Cole, the former director of the University of Michigan's Office for the Study of Automotive Transportation. After a cautious start, manufacturers have embraced the crossover concept wholeheartedly. By the end of the year, analysts like George Pipas, of Ford Motor Co., expect to see at least 70 different crossovers on the U.S. market. Ford is betting big on its new Edge, which debuted in Detroit, alongside the new Lincoln MKX (pronounced Mark X). It appears that other versions of the Edge platform are in the works, with some crossover vehicles likely for the product-starved Mercury brand.
Everywhere you turned at the L.A. and Detroit shows, you were apt to run into another example of this emerging market segment. Honda's Acura division scored a smash hit with its first crossover-utility vehicle, or CUV. And the MDX will soon be joined by a downsized version, the RDX. Mazda will enter the fray with its all-new CX-7, while GM's long-troubled Buick brand, desperately hoping to regain some momentum, has rolled out the Enclave. A quick glance suggests that most of these new entries have something specific in common. "The most successful crossovers are the ones that look like conventional SUVs," points out General Motors' car czar, Bob Lutz, adding that "many people don't even know they're buying a CUV."
But as with all rules, there are some successful exceptions. We'd probably not be seeing much of the Subaru brand were it not for the Legacy Outback, essentially a high-riding version of the conventional Legacy wagon. Audi is just rolling its first crossover, the Q7, into dealer showrooms. Like the majority of CUVs, it's a sport-ute on a passenger car platform. But during a Detroit preview, the German maker offered a tease of what may follow. The Roadjet concept is a wedge-shaped crossover/wagon with a sporty temperment. The Roadjet's selectable drive system would make it possible for a driver to choose different settings for steering, suspension and transmission, as well as engine performance.
When it comes to crossovers, creativity is the key. "You can...create any segment any way you want," suggests Jim Hall, chief prognosticator with the automotive consultancy AutoPacific Inc.
Porsche, for example, blended sports car with sport-ute and came up with the Cayenne, whose top model boasts 520 horsepower. And crossovers aren't limited to car/truck combinations. There are so-called truck/trucks, like Ford's recently redesigned Explorer SportTrac. It mates the front half of an Explorer sport-ute with the shortened bed of a Ranger pickup. Chevy's SSR, nicknamed the "Corvette truck," is a retro-looking pickup with the Vette's V-8 and an unusual retractable hardtop. The crossover concept is clearly contagious. Designers and engineers are even breaking down barriers between traditional passenger car segments. Many reviewers rated Mercedes' CLS, a so-called four-door coupe, the most beautiful car of 2005. Aston Martin's Rapide concept explores similar ground, and could make production before the end of 2007.
CROSSOVERS GO MAINSTREAM
As fast as SUV sales boiled up during the '80s and '90s, they are no match for this emerging segment. American motorists snapped up about 2.25 million crossovers last year, making this the fastest-growing product niche in U.S. automotive history. By comparison, sales of conventional sport-utility vehicles had been declining, even before last summer's oil shock. After reaching a record 2.98 million units in 2000, SUV sales dipped to 2.45 million in 2005. The crisscrossing trends are expected to continue. "Crossovers will cross over conventional sport-utility vehicles in 2006," forecasts Ford's Pipas, the U.S. sales analysis manager. While crossover volumes will easily approach 3 million by decade's end, sales of conventional SUVs could plunge below 2 million.
Detroit's Big Three got off to a slow start in the CUV segment, but the domestic makers are aiming to catch up with a vengeance. The Buick Enclave is one of at least 14 CUVs that GM intends to build before the decade ends. Chrysler's wagon-like Pacifica dawdled at first, but is steadily gaining ground. New for the '07 model year is the Dodge Caliber, a sharp-edged design that's half wagon, half ute and decidedly more interesting than the stodgy Neon sedan it is intended to replace.
Even DaimlerChrysler's Jeep division is getting into the act. Until now, every Jeep has had to be "Rubicon ready," a reference to what is generally considered the country's most challenging off-road course. You may have noticed those little "Trail-Rated" badges on such current products as the Grand Cherokee, Wrangler and Liberty. The Compass, expected to reach showrooms this year, will be Jeep's first soft-roader. It's a risky move that could set brand loyalists huffing. But DaimlerChrysler, like Ford and GM, has no choice. The market is shifting, and SUV profits are shrinking even faster than sales.
The product push is paying off, however. While Honda remains the CUV market leader, with sales of nearly 400,000 last year, GM is gaining ground with models like the Saturn Vue and Chevrolet Equinox. Ford took third in the segment, unexpectedly nudging past Toyota, while Chrysler rounded out the Top 5.
When the Mercedes-Benz M-Class lineup made its debut nearly a decade ago, it redefined the concept of luxury. The 1998 model had the heated leather seats, big navigation screen and high-end sound system one would have expected in an E- or S-Class sedan, but the high-riding SUV emphasized truck-like, off-road performance, trading off some of the comfort you'd normally expect of a Mercedes sedan. The new ML500 has undergone the automotive equivalent of an extreme makeover. The 2006 model has evolved into a monocoque crossover that's decidedly more sleek and stylish. Sure, owners lose a little off-roadability, but the new model is markedly more comfortable and easier to handle on the road.
The reborn M-Class joins a fast-growing lineup of Mercedes crossovers, including the new R-Class, the B-Class (not currently sold in the United States) and the soon-to-be-redesigned GL. The original version, formally known as the Gelöndewagen, was the Teutonic equivalent of the Hummer: big, bad and bulky. But as with the M-Class, the new eight-seater will evolve into a crossover.
Other conventional sport-utes could follow, though as GM's Lutz was quick to emphasize, "There's always going to be a market for the SUV." One reason is that crossovers tend to sacrifice towing capacity, a big plus for sport-utility vehicles.
CUVs are also cannibalizing other segments of the market. "They're pulling people out of cars," much like the sport-ute did during the '80s and '90s, stressed analyst Hall. So how fast the crossover market continues to grow will depend on a variety of factors. Perhaps the most important is the creativity of industry designers and engineers. U.S. buyers are no longer willing to accept one-size-fits-all automobiles. They want products that reflect their individual tastes and needs, and the fragmented crossover market is well suited to serve up what buyers want. CUV sales could gain even more momentum if global oil prices continue rising. "They're our hedge," says GM chief executive officer Rick Wagoner.
What exactly is a crossover? That's not always easy to answer. It can be car-like, wagon-like or virtually identical to an SUV. What sets the CUV apart is its ability to deliver the best attributes of a variety of vehicle types. That's why it's likely to remain the auto industry's hottest segment for years to come.
Paul A. Eisenstein publishes the Internet automobile magazine
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