Behold the new symbol of America: Small SUVs and compact crossover utility vehicles are now the most popular new vehicles in the U.S., according to analysis by TrueCar.
In the first three months this year, 15.6 percent of the light vehicles sold in the U.S. were compact utility vehicles. That surpasses compact cars, which made up 15.1 percent of all sales.
TrueCar said the surge in popularity of small SUVs and crossovers will continue throughout the year and make it the most popular segment for 2015.
“Car-buyers’ shift in preference to utilities from sedans is a clear secular trend we see in TrueCar demand data, transaction price data and sales results,” said John Krafcik, president of TrueCar.
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.”
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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