What was once a niche is now a mainstream choice, but what is that doing to crossover vehicle values and demand?
When Nissan launched the Qashqai, even it can’t have imagined the success of a crossover that pioneered a sector, with every self-respecting manufacturer now having at least one, and in many cases more than one, crossover.
The Qashqai now sits in the top three best-selling fleet models, and an array including the Hyundai Tucson, Kia Sportage, Mercedes-Benz GLA, Peugeot 3008, Toyota C-HR and VW T-Roc all rank well within the top-30 fleet models, in most cases out-selling the comparative hatchback or saloon where there is one in their range.
“Used demand for crossovers is exceeding C-sector products such as the Ford Focus. This is because they are still seen as aspirational models,” says Cazana director of insight Rupert Pontin. “This aspirational tag is likely to continue and there remains some discussion as to what will happen with demand for standard C-sector models.”
Pontin did though say residuals have dropped over the past 12 months, with the retail price of three-year/60,000-mile petrol crossovers going from 50% to 45% of original cost, and diesels dropping from 47% to 44%.
The point about increased supply is also made by Cox Automotive’s customer insight and strategy director – cars, Philip Northard (pictured right). “Like many vehicle types, the SUV sector has suffered during the mid-period of 2019, and is now tracking slightly behind the average for three-year old vehicles with around 60,000 miles,” he says. “Pressure in the sector is partly due to the volume of new models.
“Over recent years we have seen an explosion of entrants into the crossover sector, which initially created confusion,” Northard continues. “There are now signs that manufacturers are increasing the offer of low-CO2 models.”
But Cazana’s Pontin predicts that crossovers will remain a mainstream established choice. “Popularity is likely to continue to improve and this is good news as the value of ex-fleet vehicles coming to market could threaten their RV position.”
CROSSING OVER TO FOUR-WHEEL DRIVE
Although the crossover sector is more about looks than actual off-road ability, some manufacturers do sell four-wheel-drive versions (particularly in the larger crossover set) that take a small percentage of sales.
“There is good demand for the 4×4 versions generally speaking, but they are much rarer and tend to command a slightly stronger residual value although they are priced higher,” says Cazana’s Rupert Pontin (pictured). “However, if volume were to increase, this premium may decrease as there are probably fewer people who would really need a 4×4.”
PETROL NOT A PREMIUM
The slight fluctuation in fortunes between petrol and diesel within the crossover sector is something Cazana has identified, and director of insight Rupert Pontin says it will continue, especially in the late-plate market where oversupply is an issue due to the stronger recent petrol registrations.
“We just need to watch what happens as more petrol-engined variants come to the market,” he told Company Car Today.
According to Cox Automotive, there has also been a difference in terms of price pressure between the volume and prestige brands. “In particular, higher-valued product has suffered as consumer uncertainty and confidence continue to create caution,” said strategy director Philip Northard.
AUTOMATIC FOR THE PEOPLE
Stuart Pearson, BCA’s COO UK remarketing, offers the market leading company’s insight on remarketing crossover models:
1. Appeal is enhanced further by good spec and colour choice
The latest generation of crossovers offer refined motoring, robust good looks, plenty of options and flexibility for families, which makes an appealing package. Ideally these should come to market with a good level of specification and in a good ‘retail’ colour – something to consider if you are specifying fleet models at the front end.
2. Crossover success built on niche differentiation
Motorists’ expectations are growing, and the need to be seen driving something a little bit different is a powerful factor for the used car buyer. Manufacturers have very successfully introduced a number of niche models into the wider marketplace and these are proving very desirable.
3. Prepare well to head-off choosy customers
Professional buyers will compete strongly for these ‘lifestyle’ cars. Although choice is wider and volumes are growing, desirability and demand mean generally values hold up well. However, buyers are fussy over condition and mileage and a full service history is important. It is worth investing in pre-sale preparation to repair any damage to paintwork or trim.
4. Increased choice makes correct pricing important
The critical factor for used buyers is price. Some models can look expensive when compared with the alternatives such as mini-MPVs or five-door hatches, which are available in large numbers at a variety of price points. However, with increased volumes meaning more examples at a variety of ages and price points, the crossover is a well-established sector of the used car market. Choice is critical for professional buyers because that is what their retail customers are looking for. As always the car must be valued in line with market sentiment, properly prepared and in clean condition to generate interest.