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Market Trends

The Growing Penetration of Crossovers into the Commercial Fleet Market

August 15, 2016, by Mike Antich - Also by this author

Crossover utility vehicles (CUV), or simply known as crossovers, represent one of the fastest growing segments in the auto industry. Vehicle registration data from R.L. Polk shows that crossover vehicles now comprise 27 percent of the total auto market in the U.S., which is significant, considering the vehicle segment was virtually non-existent 20 years ago. As a consequence, OEMs are adjusting future product plans to meet this ongoing trend.

Likewise, commercial fleet sales are also reflecting an increased acquisition of crossover vehicles. Today, as a percentage, fleet registrations of crossover models, such as the Chevrolet Equinox, Ford Edge, Dodge Journey, etc., are beginning to mirror the market share found on the retail side of the business.

For some buyers, there is still a little fuzziness as to what constitutes a true crossover. Essentially, a crossover is an SUV-like vehicle built on a car platform. Crossovers use unibody construction, typical of passenger vehicles, instead of the body-on-frame platform used in light trucks and many SUVs. A crossover also combines SUV features with features found in a car, especially station wagons and hatchbacks. For example, a crossover includes common SUV characteristics, such as greater interior volume, a higher center of gravity, and high ground-clearance, which are combined with car-like handling and increased fuel economy.

Shifting Fleet Preferences

Crossovers are shifting fleet buying preferences in the type of vehicles found on corporate selectors. Today, there is a growing acceptance of crossovers as a fleet vehicle. Once crossovers were considered an upgrade; however, today, these vehicles are now in fleets in representative ratios as the retail market.

"Crossovers continue to be a very popular choice for many fleets, and they're being offered on selector lists at many companies," said Ed Peper, U.S. vice president, General Motors Fleet. "They make good TCO sense because of their versatility and strong residual values."

Other OEMs, such as Fiat/Chrysler Automobiles (FCA), are likewise reporting similar trends with their fleet customers.

“A recent trend – and one that’s putting a lot of wind into FCA’s sails – is the shifting fleet preferences between vehicle segments. Five years ago, a lot of skeptics wondered about our focused investment in crossover vehicles. Today we’re reaping the benefits of that decision as a growing number of fleet managers are considering and choosing crossovers instead of mid-size sedans,” said Jeff Kommor, vice president – U.S. Sales Operations/U.S. Fleet Operations for FCA. “With crossovers now achieving comparable fuel efficiency, TCO, and even higher levels of driver protection, they’re becoming a smart choice for more and more fleets. I can personally tell you that our Dodge Journey, Jeep Renegade, and Jeep Cherokee are three of the most often tested vehicles at our fleet customer ride and drive events.”

Other factors stimulating fleet acquisition of crossovers are ergonomics, an all-wheel-drive option, and increased cargo-carrying capabilities. “We have seen more commercial customers migrate from sedans to CUVs and SUVs for the same reasons that retail customers have migrated toward utility vehicles. The ingress and egress is easier and there is more cargo room for equipment, products, and samples. The interiors are also more roomy for those fleets that transport personnel,” said Michele Bartlett, general manager, commercial & government operations for Ford North American Fleet, Lease & Remarketing Operations. “Another very important feature of utilities is all-wheel drive. Customers in Northern states with significant snowfall appreciate the capability and ground clearance that comes with these vehicles.”

Market Share Forecast for Crossovers

The crossover segment caught everyone’s attention in 2006, when crossover sales made up more than 50% of the overall SUV market. In 2014, crossover sales overtook the sedan as the most purchased body style in the U.S. As crossover sales continue to grow, crossovers promise to become even more pervasive in OEM lineups. Even exotic brands, such as Aston Martin and Lotus, are studying CUV entries. In the retail market, virtually every OEM brand has recorded increases in light-truck sales, which includes pickups, crossovers, and SUVs, while cars sales were down. Low fuel prices have contributed to the trend away from cars and to the acquisition of more trucks, SUVs, and, in particular, crossovers.

Proponents forecast the market share of crossovers will continue expand because they integrate the best features of both a car and truck. Also, higher residual values make the TCO of crossover very attractive, validating the truism that what sells good new, sells good used. As a result, crossovers promise to have an even greater presence on corporate fleet selectors in the coming years.

Let me know what you think.

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Author Bio

Mike Antich

Editor and Associate Publisher

Mike has covered fleet management and remarketing for more than 20 years and entered the Fleet Hall of Fame in 2010.

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