Honda's sedans may be slumping, but its new HR-V, a small "crossover" SUV, is off to a strong start. Source: Honda.
It used to be that Detroit ruled the SUV markets, while the Japanese brands owned the fuel-efficient car segments.
But things have changed. A few years ago, we saw that Detrot's latest small cars, Ford's Focus and General Motors' Chevrolet Cruze, were finally good enough to compete with -- and in some ways, outclass -- stalwarts like Toyota's Corolla and Honda's Civic.
Now that gas is cheaper and more buyers are opting for SUVs, Detroit is doing well -- as you'd expect. But this time around, there's a twist: The Japanese are selling a lot of SUVs, too.
Big drops in Accord and Camry sales were offset by strong SUV results At first glance, you'd think that June was a terrible month for Honda. U.S. sales of the Accord fell 15%, while sales of the Civic were off 11%. Rival Toyota fared a little better, but not a lot: Camry sales were off 8%, and sales of the Corolla dropped about 1%.
But if executives at the two companies were disappointed by those numbers, they had some consolation elsewhere: Both Honda and Toyota are selling a lot of SUVs.
Sales of Honda's CR-V rose 8.5% over very good year-ago results last month, and it sold nearly 8,000 units of its new one-size-down HR-V. (The CR-V shares underpinnings with Honda's compact Civic, while the HR-V is related to the subcompact Fit sedan.)
A similar story played out at Toyota, where sales of the CR-V's chief rival, the RAV4, rose 15%, while sales of the midsize Highlander rose almost 20%. What's going on here?
This time, the Japanese were ready for a market shiftWhat's going on here is a major shift in Americans' car-buying patterns. In the last few years, U.S. buyers have increasingly chosen SUVs over sedans. And unlike the SUV boom in the early 2000s, this time nearly all of the automakers were ready with competitive SUV models.
Is this all about cheap gas? Gas prices probably aren't hurting SUV sales. But there's a lot more to this story.
The new generation of "crossover" SUVs like Toyota's Highlander are drawing lots of buyers away from sedans. Image source: Toyota.
In an interview last year, TrueCar executive vice president Larry Dominique told me that the rise of "crossover" SUVs is a key part of why SUV sales have surged. Dominique pointed out that this latest SUV boom was well under way before gas prices started to drop in the second half of 2014. As he sees it, it's not about cheap gas. Instead, it's that the latest SUVs are as close to a "no-compromise" solution as automakers have ever managed.
These (mostly) aren't the brawny pickup-based SUVs that pushed Detroit to big profits a decade ago. Instead, they're crossover SUVs. Crossovers are SUVs that are based on sedan underpinnings, rather than truck underpinnings. They drive more like cars (and get car-like fuel economy) while offering the roominess and all-weather handling that drew buyers to those older truck-based models that drove the last SUV boom.
All of the automakers are now competing for every sale Nearly all of the mass-market automakers have seen U.S. sales of sedans decline while SUV sales have been rising. But unlike the last time that happened, it's not a Detroit-versus-Japan tale. While the Detroit automakers have worked hard to match the strengths of Toyota and Honda -- and mostly succeeded -- the reverse has also been true.
That's especially important now that the U.S. new-vehicle market is likely near its peak. Growth will be harder to come by in the next few quarters, meaning that automakers will have to compete hard for every sale, in every market segment.
Toyota and Honda are clearly prepared. Can Detroit keep pace? Stay tuned.
The article How Honda and Toyota Are Becoming Big Players in Trucks originally appeared on Fool.com.
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