Attendees look at an Avventura Urban Cross by Fiat Chrysler Automobiles NV on display at the Auto Expo 2016 in India, on Thursday, Feb. 4, 2016. Subcompact crossovers have become so popular that Fiat Chrysler head Sergio Marchionne said last month that the market has shifted permanently toward crossovers and trucks, so the auto maker will cease making its Dart compact car and Chrysler 200 intermediate and find a partner to manufacture them instead.Prashanth Vishwanathan/Bloomberg
Auto makers are racing to introduce new vehicles in the latest hot segment of the Canadian market – subcompact crossovers.
Sales of the smallest crossovers surged 66 per cent last year, which was the largest increase in any vehicle segment as Canadians exited the market for subcompact and compact passenger cars and sent crossover sales soaring.
Crossovers of all sizes displaced compact cars as the largest section of the Canadian market last year and also knocked intermediate cars out of top spot in the U.S. market for the first time.
They have become so popular that Fiat Chrysler Automobiles NV head Sergio Marchionne said last month that the market has shifted permanently toward crossovers and trucks, so the auto maker will cease making its Dart compact car and Chrysler 200 intermediate and find a partner to manufacture them instead. The production capacity now dedicated to those cars will be shifted to crossovers, sport utility vehicles and pickup trucks, Mr. Marchionne said.
The crossover segment "has become so hot because this type of vehicle corrects the criticisms buyers had of traditional SUVs, which sold very well, but were not optimal," auto consulting firm AutoPacific said in an analysis of the U.S. market issued this week. "Buyers wanted products that were not hard-core off-roaders, but more civilized and city friendly."
Traditional SUVs, which consist of a body on a frame, took less than 10 per cent of the U.S. truck market in 2015, compared with more than 30 per cent in the late 1990s. Crossovers, which are not built on a frame but have the same unibody construction as a passenger car, soared to more than 50 per cent of the truck market last year from nowhere in 1995.
In Canada, sales of such subcompact crossovers as the Chevrolet Trax, Honda HR-V and Mazda CX-3 have taken off. Trax sales surpassed combined sales of two Chevrolet subcompact cars last year; the HR-V outsold the Fit subcompact car even though it only became available last June; and Mazda discontinued sales of its Mazda2 subcompact car to focus on the CX-3.
"What's appealing about all the crossovers is the functionality in terms of space," General Motors of Canada Ltd. president Steven Carlisle said Thursday while sitting at the wheel of an orange Trax at the Canadian International Auto Show in Toronto.
More auto makers will enter the subcompact crossover segment, Mr. Carlisle said.
That was immediately confirmed by Toyota Canada Inc. vice-president of sales Cyril Dimitris, who said Toyota will start selling the C-HR – smaller than the compact RAV4 crossover – next year.
"We think that [subcompact] SUV space will continue to grow," Mr. Dimitris said.
Hyundai Auto Canada is expected to start selling the ix25 model.
Ford makes a vehicle called the EcoSport that would fit into the subcompact crossover segment, but Ford Motor Co. of Canada Ltd. president Dianne Craig was coy Thursday when asked whether Ford plans to sell a vehicle in Canada that would compete in the growing niche.
"How much does mini [CUV] grow and at the expense of what?" she said in an interview at the auto show. "Does mini grow to 20 per cent, 25 per cent in the next few years? No question there will be growth."
She noted that millennials represent a big potential source of buyers for all crossovers.
Members of that generation are delaying vehicle purchases, she said, so by the time they have children, they need the space and flexibility offered by a crossover.
TPP CONCERNS
The CEO of Ford's Canadian operations says risks posed by the Trans-Pacific Partnership to the automotive manufacturing sector are among the topics she plans to raise in a meeting with federal government officials later this month.
"We support free trade, but it has to be fair trade," Dianne Craig said at the Canadian International AutoShow in Toronto on Thursday. "We've got to get these trade agreements right, and right now as the TPP stands, there will be no positive outcome for Canadian manufacturing."
Reid Bigland, CEO of Fiat Chrysler Automobiles Canada, also spoke out against the trade deal at the auto show Thursday, calling it "unfortunate" that Canada wasn't able to strike a deal similar to the one in the United States. "They received a 30-year tariff phase out and we received a five-year tariff phase out," Bigland told reporters following FCA Canada's news conference.
The Canadian Press