Traditional Premium Mid-Size SUVs: Do They Still Have LIfe?1
VehicleVoice (http://www.vehiclevoice.comhttp://www.autopacific.com) pay close attention to the the dynamics in one of the largest and most dynamic product segments in the North American auto market – the Premium Mid-Size SUV market. This VehicleVoice blog (http:/.vehiclevoice.com) delves into the dynamics between Traditional SUVs and Post-Modern SUV entries.
Are Traditional SUVs Based on Trucks on Their Way Out?
Some say traditional SUVs are on their way out, but their implied death is exaggerated at best or at worst will come only after a lengthy illness that has just begun to take root. That the playing field is changing there is no doubt, but traditional SUV entries will be an important part of the mix well into the next decade, despite the amount of chatter that Post Modern SUVs (some refer to them as crossovers) are generating and the speculation that the product configuration will take over the world. Though segmentation is subjective and a constantly moving target, but a close look at the Premium Mid-Size SUV segment as currently defined indicates that it is not quite time to write off traditional SUVs.
Ford Explorer Versus Toyota Highlander: Which is the Way of the Future?
The Premium Mid-Size SUV segment, home to the best-selling traditional and Post-Modern SUVs, is expected to stay relatively stable over the next five years (1.65 million Premium Mid-Size SUVs were sold in 2004; AutoPacific expects a similar number for 2010). But model proliferation within this group means that by the 2007 calendar year, not one will sell more than 200,000 units in any given year.
As recently as the 2004, Ford was still able to sell 289,700 Explorers; though Explorer is likely to retain their best-seller crown in 2010CY, it could do so with annual sales more than 100,000 units less than were sold in 2004. When there were fewer entries and less competition, Ford’s best year for Explorer (1998) saw 431,500 buyers take one home; the nearest competitor (Jeep Grand Cherokee) sold 229,100 units and Chevy’s Blazer trailed just behind at about 219,000 units. In a phenomenon true for just about every nook and cranny of the car market, there are more players in the segment and a smaller piece of the pie for each. The trick for manufacturers is to find a way to be profitable within the constraints of this lower volume.
Among the tools AutoPacific provides its clients is the Sales Forecast Service; while we can’t tell you here specific projections, VehicleVoice is able to share AutoPacific’s view of the overall landscape. While the Premium Mid-Size SUV segment is not expected to see a significant increase in volume from the 2006 to 2010 calendar years, the players will change. By 2010 there will be more Post Modern SUVs in terms of number of entries, which will grow from nine in 2005 calendar year to an expected fourteen in 2007 and beyond.
Before you conclude this means Post Moderns win by the end of the decade, the overall sales volume of Post Modern SUVs within the Premium Mid-Size SUV segment is expected to lag behind traditional SUVs until the 2010 calendar year. About then, sales of the two groups will approach a 50/50 split. But because the increase in Post Modern SUV sales are because more players are entering the fray as opposed to success of a specific model, the Explorer will still be king of the segment in 2010. Even the best-selling of the Post Modern SUVs (Toyota Highlander) will not bump off the ultra-traditional Explorer as the segment’s top performer. However, among the issues for Ford, and to a lesser extent for GM’s mid-size SUVs, is that the gap between entries like Highlander and Explorer is narrowing because of falling Explorer sales, not because of rising Highlander sales. Though Post Modern SUVs may well leave their traditional counterparts in the dust by 2015, the change is expected to be a gradual shift.
Post Modern SUV, Loosely Defined… Trying to Avoid That “Crossover” Word
The Post Modern SUV uses a platform with attributes more traditionally associated with cars than a traditional truck-based platform. Their engines tend to be mounted transversely rather than longitudinally and/or they use powertrains designed primarily for cars. They tend to be front-wheel-drive biased, some not even engaging the rear wheels until the system determines need for that, and their all-wheel-drive systems tend not to offer a low range or locking differentials; these are not vehicles intended for an off-road situation but well capable on rough roads, inclement weather, and slippery surfaces. Because these post-modern SUVs are based on softer platforms, they offer a more comfortable ride and a package more easily configured for seven comfortable seats than a traditional SUV package. Post Modern SUVs provide a higher ride height without as high step-in, the ability to handle a wider variety of road surfaces without the bouncy ride of a truck, and ability to carry more cargo without the high fuel economy penalty of more thirsty truck-based entries. Examples available include the Toyota RAV4, Honda CRV, Ford Escape, Chrysler Pacifica, Buick Rendezvous, Honda Pilot, Nissan Murano, and Toyota Highlander.
The Players in the Premium Mid-Size Arena Are…
Premium Mid-Size SUVs available for the 2006 model year, as defined by AutoPacific, include: Buick Rainier, Buick Rendezvous, Chevrolet TrailBlazer, Chrysler Pacifica, Ford Explorer, Ford Freestyle, GMC Envoy, Honda Pilot, Isuzu Ascender, Jeep Commander, Jeep Grand Cherokee, Mercury Mountaineer, Mitsubishi Endeavour, Nissan Murano, Nissan Pathfinder, Subaru B9 Tribeca, Toyota 4Runner, and Toyota Highlander.