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Business News/ Companies / SUV boom moves downscale as Honda, Jeep, Mazda woo Generation Y
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SUV boom moves downscale as Honda, Jeep, Mazda woo Generation Y

Compact SUVs and crossovers have grown to 11% of the US new-car market from 7% in 2007, according to Kelley Blue Book

Honda’s new HR-V, based on the subcompact Fit, expands the brand’s light-truck lineup as a smaller alternative to the popular CR-V. Photo: Bloomberg Premium
Honda’s new HR-V, based on the subcompact Fit, expands the brand’s light-truck lineup as a smaller alternative to the popular CR-V. Photo: Bloomberg

Los Angeles: Honda Motor Co., Fiat Chrysler Automobiles NV and Mazda Motor Corp. all introduced smaller entries in the booming sport-utility vehicle market this week at the Los Angeles Auto Show as the industry seeks younger buyers.

Honda’s new HR-V, based on the subcompact Fit, expands the brand’s light-truck lineup as a smaller alternative to the popular CR-V. Fiat showed the 500X, a vehicle that’s a step up in size for the Italian brand, for the first time in North America, and Mazda debuted its CX-3.

Compact SUVs and crossovers have grown to 11% of the US new-car market from 7% in 2007, according to Kelley Blue Book. Now a group of even-smaller models is emerging as the vehicles shown this week join General Motors Co.’s Buick Encore and Nissan Motor Co.’s Juke, which have combined for more than 75,000 US sales this year through October. And Toyota Motor Corp. indicated it will join the mix as well. At least one analyst said Honda may win the most customers.

“The subcompact crossover segment is about to explode, and no one will be surprised if Honda’s entrant becomes one of the best sellers in its class," said Akshay Anand, an analyst with KBB. “Much has been said about the subcompact segment, but if the Accord, Civic and CR-V are any indication, the HR-V should do just fine."

Car buyers

Subcompact SUVs will most likely steal buyers from compact cars, Alec Gutierrez, an analyst with KBB.com said in an interview. The HR-V, for example, is more likely to lure customers from the Civic or Fit—people looking for a little more storage space—than from the larger CR-V, he said.

“Gas prices are contributing to the demand, but I think you’re seeing consumers shift more toward want-based shopping as opposed to need-based," he said. “That says consumer confidence is up and folks feel more comfortable with where they’re at."

Fiat, the Italian brand known for its tiny 500, is offering the larger, brawnier 500X to compete with the Juke and Kia Motor Corp.’s Soul. With four doors and roomier rear seats than its 500, the crossover is a Fiat tailored for the US market, Olivier Francois, the brand’s chief, said on Thursday at a press conference at the auto show.

“This is our answer to the American market," Francois said. “This is what happens when Italians cross over."

The 500X is a mechanically similar to the Jeep Renegade, which was shown earlier this year at the Geneva and New York auto shows. The two are built at the same factory in southern Italy and share about 40% of their parts.

‘Young urbanites’

Mazda said its CX-3, which joins the CX-5 and CX-9, combines the design, packaging and responsive driving that appeals to “young urbanites."

Lifestyle changes are driving this evolution of the crossover market, Jim Lentz, who runs Toyota Motor Corp.’s North America region, said in an interview this week.

“Generation Y’ers are undergoing changes in their lifestyles," he said. “They’re getting older, they’re getting higher-paying jobs, they’re starting families and moving out of small sedans. They’ve always wanted new vehicles with more versatility and small SUVs may have grown a little large."

Toyota doesn’t have an entry in the segment but it’s paying close attention, he said.

“It’s obviously a segment we have to be in," Lentz said. “We’d love to be first to market, but I don’t think we’ve missed the train yet." Bloomberg

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Published: 21 Nov 2014, 10:54 AM IST
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