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Automakers expect growth to continue in sales of car based crossover vehicles

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Cars were too small, sport utility vehicles too inefficient and she couldn't see herself driving a minivan. So Dr. Melissa Sundermann ended up with a type of vehicle that most automakers are banking on for sales growth: a crossover.

Built on car underpinnings but having many attributes of SUVs, crossover utility vehicles have seen explosive growth since Toyota Motor Corp. started the category with the RAV4 back in 1995.

In 1996, the RAV4's first full year on sale, Toyota told 56,709 of the small crossovers when it had the market to itself, according to data collected by Ward's Automotive Group. But sales rose quickly as other automakers saw the growth potential, topping 2.4 million last year with more than 50 models for sale.

And as automakers try to capture thousands of people like Sundermann who want more space for kids and their junk, the array of models and sales is almost certain to grow.

Last year, crossovers outsold truck-based SUVs for the first time, said George Pipas, Ford Motor Co.'s top sales analyst.

``Next year, most likely, the category will climb over the three million mark, barring a sharp decline in total volume,'' Pipas said.

Sundermann, a physician and mother of two in Ann Arbor, Mich., felt that her old vehicle, a Volvo station wagon, didn't have enough room.

``In driving the kids around and doing car pooling, I just couldn't fit enough kids in my car safely,'' she said.

Sundermann, 37, started looking at large SUVs such as the Ford Expedition and Chevrolet Tahoe, but wanted something smaller with better gas mileage. She also needed three rows of seats and enough space in the back for groceries and other items.

When her husband suggested looking at the Saturn Outlook, a new crossover vehicle, she thought it was odd because her image of the company was of one that made economy cars.

``With all the options, the price was right. We were impressed that the gas mileage was fairly decent for a bigger car,'' she said. ``I can fit all my kids and their friends and all my stuff and still feel like I'm driving a luxury car.''

The crossovers, which range in size from smaller four-passenger vehicles to ones seating up to eight, are key products for the Detroit Three as they try to regain market share lost mainly to Japanese competitors. Last month, Detroit's share of the market dropped below 50 per cent for the first time in history.

Ford, General Motors Corp. and Chrysler LLC lost a collective US$15 billion last year as they were caught unprepared when high gasoline prices sent consumers away from trucks and sport utility vehicles to cars and crossovers.

Because they're built on car platforms, crossovers are easier to manoeuvre and have smoother rides than the truck-based SUVs, said Lonnie Miller, director of industry analysis for R.L. Polk & Co.

``It provides kind of like the best of both worlds. It's a nice alternative to a minivan and as large in many cases as a gas-guzzling SUV,'' he said.

As crossovers have grown, minivan sales have dropped, off about 22 per cent from the first seven months of last year and down 12 per cent in 2006 compared with 2005. Ford and GM, seeing little growth potential, got out of the business. But Chrysler, the minivan inventor and leader, sees growth and is coming out with a new version of its people hauler featuring a seat that swivels so passengers can sit on either side of a table.

For Sundermann, though, a minivan didn't feel right.

``It would just define me,'' she said. ``I lead a sporty, adventuresome lifestyle. I'm a mother and physician. But I wasn't ready to drive a minivan,'' said Sundermann, who competes in triathlons.

``Some people don't want to be seen as kind of that traditional suburban mom driving a minivan,'' said Sarah Woolson, general sales manager at Saturn of Ann Arbor, the dealership that sold Sundermann her black Outlook in April.

Crossover sales are up about 15 per cent in the United States so far this year. At Ford, where crossover sales have risen 44 per cent over last year due largely to the Edge, Pipas believes they will continue to pull in buyers from the minivan, SUV and other segments of the market.

Pipas predicted that in two more years, there will be 70 to 80 different crossover models from which buyers can choose.

``This whole category has a long way to go,'' he said.

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Automakers expect growth to continue in sales of car based crossover vehicles
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