Carmakers get creative with crossovers as SUV alternative

DETROIT Thu Jan 17, 2013 1:55am IST

Rear corner view of the Nissan Resonance concept as it is displayed at the North American International Auto Show in Detroit, Michigan January 15, 2013. REUTERS/James Fassinger

Rear corner view of the Nissan Resonance concept as it is displayed at the North American International Auto Show in Detroit, Michigan January 15, 2013.

Credit: Reuters/James Fassinger

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DETROIT (Reuters) - Volkswagen AG's CrossBlue concept, which previews a new midsize seven-passenger crossover vehicle the German automaker plans to build in Tennessee in early 2015, is not the sexiest model on the floor of the Detroit auto show.

But it may be one of the most significant. The production version of the CrossBlue appears to be aimed at the sweet spot in a burgeoning U.S. market segment that continues to draw new entries in a variety of shapes and sizes, from compact to fullsize.

The show demonstrates an increasing diversity in crossovers, or car-based vehicles that provide the space, styling and functionality of a truck-based sport-utility vehicle without the penalty at the gas pump.

On display are such new concepts as the Nissan (7201.T) Resonance, an early look at both the redesigned 2014 Murano crossover and the automaker's new hybrid gasoline-electric powertrain; the Honda (7267.T) Urban SUV, which teases the redesigned 2014 Fit subcompact; and the Lincoln MKC, which arrives early next year as the first compact crossover for Ford Motor Co's (F.N) premium brand.

VW predicted this week that the U.S. market for midsize crossovers will grow by more than a fifth by 2021. This expanding segment attracts a wide swathe of consumers, from young families seeking an alternative to the minivan to recent retirees looking for a smaller vehicle to prepare for a possible spike in fuel prices.

ATTRACTIVE TO AUTOMAKERS

The rise of the U.S. crossover market began in the mid-1990s and built on the popularity of Toyota Motor Corp's (7203.T) RAV4 and Honda's CR-V compacts. Now, the segment accounts for 29.4 percent of U.S. auto sales, up from 26.4 percent in 2009, according data firm TrueCar.com, and ranges from small, economical entries to expensive, high-performance variants.

These models are critical to automakers as they strive to meet federal standards that call for a sharp rise in fuel economy by 2025.

But crossovers are also attractive because they often fetch premium prices, thus offering higher margins than the more conventional models on which they are based.

"When you think about it, a crossover is just a hatchback," said Jim Hall, managing director of 2953 Analytics, an automotive consulting firm. "The difference in cost to build the two is not that great."

More and more, it is the midsized vehicle that is considered the sweet spot of the crossover market, executives say.

VW executives have said the company's new midsize crossover, designed to compete with the Ford Explorer and the Honda Pilot, could be one of the key drivers in achieving the German parent's annual U.S. sales target of 1 million vehicles by 2018.

The new model also will give the VW brand crossovers in three sizes, starting with the compact Tiguan and ranging up to the fullsize Touareg.

VW's premium Audi brand, meanwhile, is planning to expand its U.S. crossover range in 2014, slotting the new Q3 compact below the Q5 and Q7. It is also filling out the line with a 354-horsepower performance edition of the Q5, called SQ5, on display at the Detroit show.

Porsche, another high-end VW brand, is also building up its crossover presence, showing the potent Cayenne Turbo S in Detroit and laying plans for the world debut later this year of the compact Macan.

Porsche plans to unveil the Macan in November at the Los Angeles show, rather than at the big Frankfurt show in September - evidence of the importance of the U.S. market, which is expected to account for at least 25 percent of the 50,000 or so Macans that Porsche hopes to sell worldwide each year.

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