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Crossover sales could pass SUVs in '06

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Big no longer suits Pat Brady.

So about two weeks ago, he traded his full-size Dodge van for a Subaru Tribeca, one of the new crossover sport-utility vehicles that are reshaping the SUV segment.

Crossover SUVs look like traditional SUVs but are built on car rather than truck platforms, making them a little smaller, easier to drive and more economical.

Their sales have quadrupled since 2000. More important, they may pass traditional truck-based SUVs in sales next year, which could lighten the segment's dark road-wolf image.

"People are more unwilling than ever to accept compromises," said Mark Williams, editor of Truck Trend magazine.

"They want the utility of a trucklike vehicle but not the trade-offs."

Dr. Brady, a Dallas orthodontist, said that now that his four children are grown, he doesn't want or need a vehicle the size of his Dodge.

"Twice downtown, I hit those little poles in parking lots because I couldn't see them," said Dr. Brady, 64. "I have an accordion and amp that I haul around sometimes, so I needed a combination of something that was bigger than a car but a little racy."

Consumers probably won't notice a dramatic difference as crossovers become the dominant SUV.

Most have that puffed-up station-wagon/soft SUV look that at least seems familiar. Think of them as SUV Lites.

But inside the auto industry, the rise of crossovers represents a significant shift.

In the early 1990s, when the SUV segment was forming, most were Big Three vehicles built on American truck platforms.

Foreign-based automakers developed crossovers several years later because they didn't have the big body-on-frame platforms to support SUVs such as the Ford Explorer, Chevrolet Tahoe and Dodge Durango.

Instead, they had to rely on modified car platforms.

The first crossover was Toyota's 1996 RAV4, a compact "cute-ute" SUV with standard front-wheel drive.

Now, with crossover sales expected to hit 2.5 million next year, the Big Three are chasing the imports and feeling a little winded.

Sales of traditional truck-based SUVs have fallen from a high of 2.9 million in 2000 to a projected 2.5 million this year – and are expected to drop to around 2 million vehicles by the end of this decade.

That decline has contributed to the billions of dollars in losses at General Motors Corp. and Ford Motor Co. The shift could even someday affect the GM Assembly Plant in Arlington, which builds full-size truck-based SUVs.

Wide variety

Crossovers run the gamut from the RAV4 and Ford Escape to the midsize Toyota Highlander, Chevrolet Equinox and Nissan Murano and to the luxury-oriented Lexus RX 330 and Cadillac SRX.

The segment's rapid growth surprised George Pipas, Ford's sales analysis manager. He originally projected that crossover SUV sales would not pass truck-based SUVs until the end of the decade. He recently revised that to 2006.

"The crossover segment is growing twice as fast as the traditional SUVs did when SUVs got started in 1990," Mr. Pipas said. "Crossovers take away the last barrier to getting into an SUV. As this trend continues, we'll see some growth trimmed from the traditional SUVs, and we will see a lot from cars and minivans."

Minivans were the vehicles of the '80s, truck-based SUVs were the vehicles of the '90s, and "crossovers will be the vehicles of this decade," he said.

No more need

Lifestyle changes – not high gas prices – are the main thing driving crossovers' growth, Mr. Pipas said.

Full-size SUV sales had started to flatten long before gas prices began to soar, he noted. Aging baby boomers, empty-nesters and other potential crossover customers no longer need or want full-size SUVs.

"If you work for The New York Times, this whole segment is demonic," Mr. Pipas said. "But to consumers, it is a segment that has lined up perfectly with their lifestyles over the years, and this is just another shift in the segment."

At Subaru of Dallas, for example, the top trade-in during the last two or three months has been full-size General Motors SUVs, said David Thomas, managing partner of the dealership.

"Our best prospect for a crossover buyer is someone driving a Tahoe, Yukon or Suburban," said Mr. Thomas, who is opening a second dealership in Plano.

"It's a shift in the market. I'd rather have a Subaru franchise today than a Chevrolet franchise."

Mr. Pipas, meanwhile, said he will meet with analysts, Wall Street officials, reporters and other industry observers over the next month to discuss changes in the SUV market.

Ford is clearly identified with big pickups and large SUVs such as the Expedition and Excursion, but it's planning several new crossover vehicles. Both the Ford Edge and Lincoln Aviator will be built off the Ford Fusion-Mazda6 sedan platform.

"We're doing this in advance of some new products that we think will be game-changers," Mr. Pipas said.

GM, likewise, says it will double its number of crossover SUVs – to 14 – by the end of the decade.

The shift puts added pressure on automakers – and particularly the Big Three – to have crossovers to sell as the SUV segment evolves.

In the '90s, GM didn't have enough truck capacity to benefit fully from the SUV explosion, and fell behind archrival Ford.

"It has some challenges if we don't have the product to hit the mark," said Paul Ballew, GM's executive director of global marketing and industry analysis.

"We're anticipating all shapes and flavors. What we're all talking about are very functional vehicles that combine car qualities with truck utility. What we're really seeing is more fragmentation of the SUV segment."

Trucks won't vanish

In fact, if crossover SUVs do overtake truck-based SUVs next year, the push will probably come – ironically – from crossovers introduced by the Big Three.

"I'm not surprised because of the huge consumer shift beginning 20 years ago to truck-based vehicles that had utility," said Wes Brown, an analyst with industry consultant Iceology of Los Angeles. "People get used to the benefits of these truck-based vehicles. If I can get one that also gets better gas mileage and drives better, that's a more attractive package."

No matter what happens with crossovers, truck-based SUVs will remain a significant segment for people who need towing capability or simply want a three-ton mode of transportation, said Mr. Williams of Truck Trend.

"My magazine won't start catering to crossover enthusiasts because I don't think they exist," he said. "There will always be a place for hardcore people who understand traditional full-size pickups and SUVs."


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I would argue the first crossovers were the 1979 AMC Eagle 4wd variations of the Concord, especially the wagon.

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