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The subcompact crossover finds its sweet spot



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CHICAGO -- The spruced-up 2017 Trax that Chevrolet showed here last week is more than an obligatory midcycle freshening. It's a statement about the importance automakers are placing on subcompact crossovers, a segment that didn't exist three years ago but in 2015 accounted for a whopping 21 percent of overall U.S. sales growth.
An influx of new players -- the Trax, Jeep Renegade, Honda HR-V, Mazda CX-3 -- joined incumbents such as the Buick Encore and Nissan Juke to form a segment seemingly overnight, one that just about every automaker is targeting as the industry's sales growth slows.
Subcompact crossover sales more than doubled in 2015, to 389,960 vehicles. And that growth is even more significant for the market segments that it's stirring up.
For one thing, the vehicles give automakers an entry point with younger buyers. One-quarter of the people who purchased one of six subcompact crossovers last year were younger than 45 and without kids, vs. 19 percent for the industry overall, according to a survey by Strategic Vision Inc.
Buyers also are coming from the other end of the spectrum: empty nesters who no longer need bigger crossovers, SUVs and minivans to schlep around their kids.
The 2017 Chevy Trax features a more refined interior, including an infotainment system that supports Apple CarPlay.

The Trax is "really popular with older folks," says Joe Koebke, general sales manager at Bob Brown Chevrolet in Urbandale, Iowa, near Des Moines. "It's a lot easier for them to get in and out of."
Small crossovers also are drawing women in big numbers. Nearly 60 percent of Trax buyers are women, the highest percentage for any Chevy nameplate, according to General Motors. The Strategic Vision poll on the six vehicles shows 54 percent of buyers were female, vs. 39 percent for the industry overall.
Jeff Conrad, Honda Division general manager, said last year that millennials were the target customer for the HR-V but the appeal could stretch all the way up to seniors -- "people who are active, who want the vehicle for utility, who are youthful at heart."
2016 Honda HR-V

What segments are they leaving? Mostly cars -- of all sizes -- although some sales are coming at the expense of larger, more expensive crossovers, according to IHS Automotive registration data prepared for Automotive News. From January to November last year, about 26 percent of subcompact crossover conquests came from buyers who turned in compact crossovers, downsizing to a Honda HR-V from a CR-V, for example. That was the top conquest segment for subcompact crossovers, the IHS research shows.
But the next three biggestcategories were cars: 19 percent came from compacts, 11 percent from midsize and 8 percent from subcompact cars. And there are plenty of first-time new-vehicle buyers who are purchasing small crossovers without a trade-in and thus don't show up in the conquest data, said IHS analyst Tom Libby.
While there is plenty of cross-shopping in the showroom, Libby said, "there's no question that the net is going to be positive for the brands that have moved into this space."
Just ask Buick executives. Since the Encore went on sale three years ago, it has become Buick's top-selling nameplate, with 67,549 sold last year. About 60 percent of those buyers were new to GM.
"It's been a great entry point for people into the brand," Buick marketing manager Rob Peterson said last week on the sidelines of the Chicago Auto Show.
GM staked out early market leadership with the Encore and Trax, which combined for about 130,000 sales last year -- a third of the entire segment. But newcomers are catching up. Jeep sold 60,946 Renegades in just 10 months last year, coming within 2,100 units of the full-year Trax total.
2016 Jeep Renegade

GM is looking to keep its edge by freshening the Trax and Encore for the 2017 model year. The Trax enhancements will come less than two years after the vehicle's U.S. debut, although the model went on sale in overseas markets in 2012 and was due for an update. The '17 will get a more contemporary front end and a more refined interior, including a slick touch-screen infotainment system that supports Apple CarPlay. Buick confirmed it will show a freshened Encore next month at the New York auto show.
So far, GM has enjoyed the segment's rapid growth without the presence of its two biggest rivals, Ford and Toyota. But that won't last.
With Scion folding, Toyota is expected to slot the smaller C-HR below its RAV4 crossover this year. And Ford is widely expected to bring to the U.S. a version of its EcoSport small crossover sold in several overseas markets, possibly under a different name.
David Undercoffler contributed to this report. 
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