Automotive Blog

Premium “sweet spot” - small crossovers

The "sweet spot" in the U.S. premium new vehicle market right now, at least from a volume standpoint, is the compact crossover category. Small luxury CUV registrations have jumped almost four-fold over the past five years, with almost 75,000 being delivered in the first five months of 2013. The segment's share of industry has reached 1.15% and small luxury crossovers now account for more than one of every 10 luxury registrations (with all luxury crossovers together making up a third of the luxury market). Much of the segment’s growth is attributable to the increase in the model count from three in 2008 to eight now. When the X3 and RDX connected with consumers back in 2006 and 2007, the other luxury makes had little choice but to follow.

Two of the eight small crossovers now on the market, the Acura RDX and Audi Q5, are the top sellers for their respective makes (based on May 2013 CYTD total registrations) and two others, the Land Rover Evoque and Volvo XC60, are runners-up.

Overview of the Premium Compact Crossover Segment

While the small luxury crossover concept will continue to gain favor, its growth will most likely be blunted somewhat by the introduction in the next 24 months of even smaller sub-compact crossovers such as the Mercedes-Benz GLA and Audi Q3. Over time, this emerging subcompact category will grow as well in keeping with the OEMs' need to meet strict federal CAFÉ requirements.

Going forward, luxury makes that want to remain competitive will have to be in the compact premium CUV category. Lexus, Infiniti, Lincoln and Porsche will all be launching new small crossovers in the next 18-24 months. With this in mind, Polk forecasts that this category's market share will reach 1.18% for all of 2013 and climb to 1.44% next year. Its growth will moderate after that but the segment will continue to be an integral component of the luxury industry for the foreseeable future.

Tom Libby is manager, loyalty practice and industry analysis, IHS Automotive

Posted on July 16, 2013

About The Author

Manager, Loyalty Solutions and Industry Analysis

Tom currently uses his passion for the auto industry to serve as a Solutions Consultant for IHS Automotive's Loyalty Practice. His past roles here include Sr. Forecasting Analyst and PolkInsight Advisor (he worked for two years in Polk’s Woodcliff Lake, New Jersey office). Tom's other interests include reading, gardening, sailing and running. Aside from Detroit and New York, Tom has also lived in Los Angeles, Denver, and Boston, where he drove a taxi for two years. Tom has also traveled extensively in the United States and overseas, including an overland trip across Asia after graduating from college. Tom is inspired by people who practice what they preach and enjoys socializing with friends that he's met throughout his career and from school.

Tom is a past member of the Board of Directors of the Society of Automotive Analysts (SAA). During the 2009 calendar year, Tom was President of that organization. He is an active member of the Automotive Press Association, and in the past has written a blog for the online version of the Detroit Free Press. Tom has a bachelor's degree in history from Amherst College, an MBA with a marketing concentration from Columbia University and once served as an Adjunct Professor of Market Research at Pepperdine University in Malibu, California.