The Intersection of Midsize Sedan and Crossover SUV

About a year ago, our 1996 Toyota had a complete brake system failure. Fortunately, nobody was in the car at the time. But we woke up to find the car having essentially driven itself out of the parking area, over the retention wall, and onto our front lawn below. Most urgently we had to figure out how to get the car off the yard and that was quite the adventure, but I will perhaps tell that story at a later time. It took about a week or so to get it out of the yard and to a mechanic. The entire time we had assumed that our days of driving the Camry were done. And so, for the first time in a decade, it was time to go car shopping. In the worst car buying market in modern history. The first step being car-shopping for what?

For the last ten years we’ve had the Camry and a Subaru Forester, a midsize sedan and a crossover SUV. I was thinking about that the other day with this exchange:

This is only true if you count crossovers as SUVs. Many of them are quite small and have similar fuel economy to sedans. Big SUVs and trucks are more like 30%. https://t.co/nCKkPuNhHz

— Nick Wagers (@nawagers) October 17, 2022

The extra context that Wagers adds clarifies things quite a bit. Much of the shift may be a relatively small change in customer preference rather than a tidal wave. The Camry may be a midsize sedan and the Forester an SUV, but in many ways they occupy a very similar consumer space. They can both fit three car seats but only barely or three adults but only uncomfortably. They both are relatively family-friendly for a family of four for a small trip or luggage to go to the airport but potentially a struggle for a real roadtrip once you start throwing pets into the mix. As we were pondering what car to buy, one of the things we had to ask ourselves was “What precisely are the advantages of a sedan?”

Contra Foxtrot’s post, it’s not clearly an issue of mileage. The Camry got better mileage than the Forester but that’s mostly a matter of Toyota vs Subaru¹. You can go smaller than a midsize and get better mileage or you can go up to a midsize SUV nd get something with more storage capacity, but at that point you’re dealing with more start tradeoffs and less overlap. The Camry and Forester/RAV4 are often substitutable but the Corolla (compact sedan) and Toyota Highlander (midsize SUV) are less so. It’s the upper mid-size and full-size sedan and crossover SUV that occupy the most similar space.

It’s honestly not hard to see why SUVs are so competitive in this space, though it’s mostly a matter of preference on the margins. Sedans have better maneuverability and are safer in some respects (particularly when it comes to children and animals around them). The crossovers have moderately more cargo space at baseline with the potential to put seats down and create a ton more with roof racks that can allow for even more on top of that. The former is a moderately better suburban commuting vehicle but the latter is a much better family vehicle (though not a great family vehicle, which I will get to).

What we found as we were pondering all of this is that we didn’t especially like the overlapping consumer space, as it provides neither the mileage benefit of smaller cars nor the cargo benefit of the larger SUVs. So we pretty found ourselves looking at compact sedans or midsize SUVs. Our own circumstances made the decision pretty easy. The specifics of our house make the extra lift of an SUV more important than it otherwise would be, and values all-wheel drive. We have also learned from experience from rentals that child safety seats are something of a pain when it comes to anything below a mid-size sedan. With all that in mind, we looked at the midsize SUV class and settled on an old Toyota Highlander.

Even with comparable mileage there are public policy reasons to discourage SUV purchasing because of the externalities (specifically hazard to kids and pets, as well as obscuring vision of people driving sedans) but it would be pretty hard to legislate since it’s not an issue of weight or mileage. If you tax gas enough you might talk us out of a Highlander but not out of owning at least one SUV or decent cargo vehicle. You could regulate height and clearance I suppose. Perhaps the best way to approach it would be to encourage carmakers to offer SUV-like features on sedans. If you have a hatchback or wagon you could mitigate some of the cargo space differential. Roof rails could also help. Ultimately, though, the customers interested in that are probably already in the SUV camp.

In that sense – perhaps the most important one – the products are not substitutable because the audiences have segregated themselves pretty firmly. And unfortunately for the champions of sedans, it seems easier to get used to the higher clearance than it does the more limited cargo space.

1. The Toyota crossover RAV4 gets comparable city mileage and is similar in weight and price to a Camry. Subaru’s midsize sedan, the Legacy, is more expensive with worse mileage than the Forester.