Crossover vehicles are beginning to emerge at a time when the automotive industry is becoming product centric.  Incentives can only drive the consumer to the showroom for so long, so the manufacturers need to capture the imagination of the customer and their ever changing needs, whilst at the same time spreading their product offering and minimising costs. Report by Jonathan Carrier.

The needs of the consumer are becoming more varied as there has been a major shift in the type of vehicle people drive and what they want the vehicle to do.  Today’s modern society and its trappings means that the average consumer no longer wants or needs an average run-of-the-mill saloon. The consumer now wants performance, handling, acceleration and comfort together with the key modern lifestyle attributes of functionality, boot and storage capacity, and versatility – and is not willing to compromise. Functionality and versatility are the critical features that are driving product fragmentation in the automotive markets on both sides of the Atlantic.  In Europe it was possible to cover the entire market with five body styles in 1989, which would cover less than 50% in 2002, with the number of models on the market over the past decade having doubled from 250 to 500.  This trend echoes the market niche explosion that had already occurred in the US automotive industry.  In the US, the market averages more than 16 million vehicles but there are still only a few vehicles routinely capable of generating 250,000 annual sales.

Market fragmentation seriously threatens car manufacturers’ profit, as the premium brands move down segment and increase their product offerings. Large portions of the market are slipping away from mainstream car manufacturers, as premium brand manufacturers, particularly in the D and E segments, are squeezing them out. So in order to keep up with the competition, carmakers will have to expand their line-ups to include more niche vehicles and “segment busters” – a way to stand out from the pack when times are hard, and sales are driven by incentives not the product.  In Europe Renault started this trend with the Espace and has continued with the scenic and most recently the Avantime and Vel Satis.  Like Renault, other traditional full liners are realising that the only way to succeed in such a premium orientated market is to offer something different from the norm.  For example Opel will launch the Signum and Fiat will launch the new “Large”, both crossover vehicles targeted at the executive buyer in the D segment.

But car manufacturers are not only trying to to grab a slice of the premium vehicle pie by satisfying the executive and premium brand consumers that populate the higher end vehicle segments – they also want to target niche crossover vehicles at the new generation of brand-conscious consumers that are driving the market. The rise of the baby boomer, and their impact on the growing premium vehicle market is well documented.  Baby Boomers have changed the demographic of the total population and they number 72 million in the US alone.  However other social demographic groups are now lining up on the starting grid in the automotive marketing race.  In third place on the grid, behind the Baby Boomers, is Generation X – today’s twenty and thirty-somethings.  Their numbers are not as large as the boomers, but they are just as important as they do not value the same lifestyle or embrace the same values as Boomers.  But taking pole position ahead of the Boomers is Generation Y.  Millenials, as they are also known, are classed as being born between 1981 and 1993. There are 60 million people in the US alone who fall into this demographic group, more than three times the size of Generation X.  As a result they’re the biggest demographic group to hit the automotive market since the Baby Boomers. Manufacturers are therefore aiming to target entry-level crossovers, such as Toyota with the Scion brand, that will appeal to this social demographic group.   Whoever the end target consumer, crossover vehicles tend to share common attributes.  Modern day crossovers are hybrid vehicles that combine the attributes of a station wagon, MPV and SUV.  Crossovers possess the rugged looks and all-wheel-drive of SUVs with the seating capacity of MPVs, the load practicality of a station wagon and the smooth ride and handling of a sports saloon.  A crossover vehicle is essentially a jack-of-all-trades, a different car to different people depending on their use, customer needs and desires.

Historically there have been few mainstream attempts at crossover vehicles, perhaps the most successful was the Chevy El Camino. General Motors first produced the El Camino in 1959, offering consumers the handling characteristics of a sedan with the cargo capability of a pickup.  However it wasn’t until the late 1980’s that the crossover trend moved into its infancy with the emergence of the SUV.  The SUVs of today can, in fact, be classed as crossovers. They were the first type of crossover to take the market by storm and they have also been the first body style to evolve – the Honda HR-V, Ford Explorer Sportrac and Chevy Avalanche are just some examples.  We are now only just seeing the true evolution of the crossover trend – in terms of product life-cycle they have only just entered the development phase.  In the US, crossovers have already found their way in to the subcompact class, trying to tempt Millenials into the showroom.  The PT Cruiser was the first to arrive in that segment and has been followed by the Toyota Matrix and Pontiac Vibe.  Other Japanese manufacturers, such as Honda and Suzuki, have also followed suit and there seems to be range of crossover vehicles on the horizon targeted at the emerging consumer.  The first of these is Honda’s Element, a four-door utility vehicle that Honda calls “a dorm room on wheels’, to be launched at the end of 2002.  At the premium end of the market the Mercedes GST, or “Grand Sports Tourer”, and the Cadillac SRX will be launched in 2004.

However crossovers present significant challenges to the automotive manufacturers. They will be forced to develop new vehicles with limited resources in order to be able to sell them profitably at lower volumes. Furthermore they must have the necessary manufacturing infrastructure in place to be able to build several different vehicles on the same assembly line at one time, enabling them to switch output as demand shifts from one model to another.  More importantly manufacturers will have to target the niches best suited to their brands whilst not detracting from the core values inherent to the vehicles in the rest of the line-up.  So what does the future hold for today’s current bodystyles and how will they evolve into the crossovers of tomorrow.

Station Wagon

In Europe the number of station wagons sold between 1992 and 2000 grew by 80%, but has fallen around 17% since then.  In Europe it is predicted that the station wagon market will grow through the introduction of newer, low segment and luxury variants.  In the US it is expected that the station wagon market will grow 50 percent in the next five years to between 250,000 and 300,000 vehicles, although it will still represent only a small share of the total U.S. auto market.  Today’s station wagons fall into three types:

  • Premium Sport Wagons (Alfa Romeo Sportwagon, Lexus Sportcross etc.) often spin-offs of luxury saloons will little improvement in boot space, but come served with same premium brand image as their four-door siblings.
  • Full Liner Sport Wagons (Peugeot 307 and 207 station wagons) are typically B and C segment, smaller station wagons that seek to add a cool/sport image to the product range.  A rapidly growing class that is leading a European renaissance in station wagons.
  • Traditional wagons (Ford Mondeo, Opel Vectra etc.) are mainstream station wagons that retain a firm stance in the middle of the market. They remain a family choice for those who don’t want an MPV or SUV.


The multi-purpose-vehicle market is changing very rapidly in Europe, from full size MPVs to a much more broad-based vehicle range pioneered by the Renault Scenic in the compact MPV segment.  The large MPV segment may not be as strong as it used to be in Europe – indicated by Opel’s decision to drop the Sintra after only a few years on sale. The MPV market falls into four categories:

  • Sub-Compact MPV (Toyota Yaris Verso, Honda Jazz).  B class vehicles are the latest to receive the MPV treatment, and large growth is predicted. The future will see the launch of the Fiat B-MPV, Opel Meriva, Ford Fusion and Renault Clio MPV.
  • Compact MPV (Toyota Corolla Verso, Renault Scenic, Vauxhall Zafira) currently experiencing high growth as the economical and practical solution for the family.
  • Large MPV (Renault Espace, Toyota Avensis Verso, Ford Galaxy) the first and original European MPV segmentation started by the Espace in the 80’s with established players and many joint ventures.
  • Luxury MPV (Chrysler Voyager, Renault Vel Satis) characterised by individual variants, such as coupe and premium E segment crossovers.

The ‘compact MPV’ will probably have a longer life in Europe- spinning off crossover variants of the same theme (e.g. Scenic RX4, Seat Salsa etc). The industry expects growth in MPVs from a 2% market share to 10% in Europe by 2005.  This will be through the introduction of so-called sports compact and urban MPVs.  Typically these will be B/C segment vehicles with compact dimensions and fluid, sleek designs that combine city adaptability and a certain sports prowess.  They will be “polyfunctional” vehicles that feature high degrees of internal reconfigurability to further maximise internal space.


Past the toddler stage, SUVs are moving into their adolescence, discovering what they are, to whom they appeal and why. Thus, the segment is individualising its vehicles to appeal to a broader range of incomes and interests – as a result an SUV is no longer just an SUV.  In the US studies show that 65% of buyers under the age of 30 will consider an SUV, though Baby Boomers are currently driving the segment. There are four categories in the SUV segment:

  • Entry-Level (Suzuki Vitara, KIA Sportage), bargain basement 4×4 motoring, urban SUVs with dimensions to suit the city
  • Compact (Ford Explorer) the largest SUV class in the world
  • Full-Size (Ford Excursion) traditional market segment, and biggest SUV class in US
  • Luxury (Range Rover, BMW X5) also encompasses vehicles in the three other categories, such as the compact-size Freelander.

Entry-level and luxury SUVs will be the categories to see real growth in the future – J.D. Power and Associates claim to that SUVs will replace midsize cars as the most popular vehicle within the next 5 years in the US market.  Specifically entry-level SUV sales are expected to double in the next five years – many of these targeted at the Generation Y through the development of crossover vehicles that will take two approaches.  The first type will be affordable and unpretentious C segment vehicles with common features such permanent four wheel frive, simplicity and functionality and interiors featuring a strong sports/rally theme. The second will “high versatility” vehicles with MPV reconfigurability, SUV height and adaptability.  A common theme will be permanent 4WD, a rigid safety cell without B-pillar and six seat arrangements.  It is predicted that luxury SUV sales will increase around 50 percent, with expansion by premium brands across C, D, E and F segments.

Jonathan Carrier is a graduate with the Fiat Group on its international management training program – Fiat  Most recently Jonathan worked in the Product Department at Fiat Auto in Turin, Italy under Antony Sheriff on the development of current and future Alfa Romeo vehicles.  He currently works for CNH, part of the Fiat Group, in the USA.

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