The RAV4 will soon become the bestselling vehicle in the Toyota Motor Corp. lineup in the United States – perhaps as soon as the end of the decade – providing a strong boost to vehicle production in Canada, where two Toyota plants will be producing the crossover by 2019.
The question is, when will it outsell the Toyota Camry, a mid-sized passenger car that now ranks No. 1 in Toyota's U.S. sales and was the bestselling car in the United States last year, said Jim Lentz, chief executive officer of Toyota Motor North America Inc. and the highest ranking Toyota executive in North America.
Small crossovers or SUVs, surpassed mid-sized cars in the U.S. market for the first time in 2015, Mr. Lentz said. Sales of those vehicles also exceeded deliveries of compact cars in the Canadian market for the first time.
"Even when we see gas prices move [up] again, I don't think we're going to see a decline in demand for small SUVs," he said in an interview at the North American International Auto Show in Detroit. "That's a trend that's here to stay. That's really what's driving this and it's going to continue to drive it."
He attributes that to demographics, low fuel prices, a proliferation of new models in the segment and the growth in the size of the vehicles themselves.
The RAV4 and the Camry are now similar in size and ride quality, offer the same creature comforts and have similar fuel economy performance.
"They are almost substitutes for each other," he said.
There are two parts to the demographic trend – aging baby boomers are switching to small SUVs from passenger cars because of ride height and car-like handling, and Generation Y buyers and others with young families prefer crossovers.
Toyota sold 315,412 RAV4s in the United States, up from 267,798 a year earlier. Camry sales rose a fraction to 429,355 from 428,606.
The rise of the RAV4 is also evident in the Toyota Canada Inc. sales figures for 2015. RAV4 deliveries rose 15 per cent in Canada, where it is also the No. 2 vehicle, in this case behind the Corolla compact.
Sales of Corollas fell 3 per cent in Canada.
The RAV4 is produced now at Toyota's plant in Woodstock, Ont. The Cambridge, Ont., plant will replace the Corolla with the RAV4 when Corolla output moves to a new Mexico factory later this decade.
Four of the five auto makers that assemble vehicles in Canada make crossovers, which means the Canadian auto industry is well positioned for stability and possible growth at several factories.
General Motors Co. builds the Chevrolet Equinox at its plant in Ingersoll, Ont. That crossover ranked No. 2 on GM's U.S. sales list last year behind the Chevrolet Silverado pickup.
Sales of the Ford Motor Co. Edge and Honda Motor Co. Ltd. CR-V crossovers, built in Alliston, Ont., and Oakville, Ont., respectively, also rose last year.
Fiat Chrysler Automobiles NV is the only one of the five auto makers that does not assemble a crossover in Canada, but it is expected to add production of such a vehicle to its assembly plant in Windsor, Ont., later this decade.