Crossover And SUV Sales Surge Fattens Profits For Automakers

All those SUVs and crossovers Americans are flocking to buy are providing a nice windfall for automakers.

Not just because they sell so many, but because the sit-high vehicles command dramatically higher prices than cars of similar sizes. And they cost more or less the same to build.

In the subcompact, compact and midsize segments, average transaction prices for SUVs and crossovers in June ranged from 39 to 51 percent higher than sedans and hatchbacks of a corresponding size, an analysis of Kelley Blue Book data shows. Automakers have learned to build roomier vehicles — crossovers and SUVs — that retail for more but with minimal additional manufacturing cost, said Jack Nerad, executive market analyst for Kelley Blue Book.

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TheSteve - 7/24/2017 10:51:40 AM

+3 Boost

re "[SUVs and crossovers] command dramatically higher prices than cars of similar sizes" -- That depends on what you're getting. When I was shopping for a new vehicle, I was planning on getting an Audi A5, but I ended up getting a Q5, with a LOT more space, more comfort, quicker acceleration (3.0L TDI Q5 vs 2.0L gasoline A5), better fuel economy, much lower fuel cost per mile, and with a *lower* price tag! It was a win all-around for me.

I suspect there are other examples like this too. For example, if you're looking at a Mercedes C-class coupe and decide for a GLC, you'll save some money. The GLC is just a little more expensive than the C-class sedan (not "dramatically higher prices").

MDarringer - 7/25/2017 10:19:59 AM

-2 Boost

Many of the crossovers are closely related to mainstream sedans, but buyers NEVER question paying list price or nearly list price for a crossover when the sedan version must be steeply discounted to move the metal.

A lot has been written about how crossovers are killing the sedan, but that's not true. Crossovers--because of their close relation to sedans and high sales--make the business case for a sedan easier to justify.

One platform at Ford is a case in point typical of the industry. The platform underpinning the successful Edge also underpins the Lincoln MKX and very soon it will underpin the Explorer no doubt with a Lincoln version too. The success of those crossovers makes the Fusion, MKZ, and Continental viable. The trick will be to produce fewer Fusions and more Edge/Explorers.