Wednesday, September 16, 2015

Small Cars, Big Prices: Why is the Subcompact Crossover Market So Hot and Why are They so Expensive?

Chevrolet TraxBy Michael Rentfro

Let me remind you all that I live smack dab in the middle of Heartland USA. There are no mountains within a day’s journey, unless you count the triple-decker on-ramp that crosses the Mississippi River into Illinois. There are no beaches you can drive on without being thrown in Army Corps of Engineers jail, and there are no curvy roads of any sort, unless you count the state highway they had to build around Cletus’s farm because he “simply would not sign that there piece of paper them big city muckey mucks threatened him with.” Our roads are straight and flat, and most of our first cars are funded by walking beans, bailing hay, detasseling corn (a practice so strange to city dwellers, MS Word swears it’s misspelled!), or simply passed down from generation to generation. It’s a very simple life, but we often find ourselves behind in the times when it comes to embracing change. This is why it’s so strange to me to see countless Jeep Renegades and Chevy Traxs (exactly what is the plural of Trax?) cruising our laser-straight highways here in the heartland. Even here, the subcompact crossover market seems to be exploding.

So what’s the deal? Is America finished with the whole “size DEFINITELY matters” mentality and finally embracing the far more practical small car? Is it the ability to obtain accouterments once reserved for larger luxury cars in a smaller, more affordable package? I thought I would provide some “investigative journalism” right here on this very friendly blog to find out why so many people are encroaching on our small car turf by trading in their gas guzzling, over-sized, dinosaur-poop-eating, baby-seal-clubbing, way-more-than-you-could-possibly-need-to-haul-your-two-kids-to-soccer-practice behemoths for a well-appointed compact crossover.

Jeep Renegade Judging by the 15,000+ spectators and participants of the annual “Diesel Truck Extravaganza” that took over my city this weekend, rest assured—size still matters to an overwhelming majority of Heartlanders. I guess we can rule out this reason. Oil prices are ridiculously low, so I’m assuming the trend has nothing to do with gas mileage. Our local soccer organization is currently out of season, so one could assume hauling large numbers of sweaty Gatorade fueled “tweeners” to and from practice on your car pool day has little to do with it as well. Ultimately, this leaves price. Upon further investigation, I’m not really sure price should really be a factor. According to the websites attached to my local Jeep Dealership, a new 2015 Jeep Renegade Latitude FWD (remember, no mountains, curves, or beaches requiring AWD here …) would run $23,690. In my less than expert opinion, this is a bit much for a mid-level compact vehicle, regardless of how it makes even yellow look masculine. By comparison, the considerably larger and similarly equipped 2016 Compass goes for $24,625. Although much less rugged and manly, I’d pay the extra $935 to be able to put all four of my soon-to-be teenage daughter’s BFFs in the back seat on the way to the mall.

If you prefer the Chevy, the 2016 FWD 1LT Trax 1goes for a cool $25,725, while the 2015 FWD 1LT Equinox can be had for $25,760. I say pay the extra $35 and use the extra cargo room to start your own Uber service. Similar deals can be found on the Mazda CX-3 and CX-5, and even the Honda HR-V and CR-V with new prices coming within less than few hundred dollars between the models.

So the results of my internet investigation turned up with no real, hard evidence to determine why compact crossovers are becoming so popular. There are tiny with no cargo capacity, horribly expensive, they might pick up 1 or 2 MPGs over their larger sibling at most, and they honestly can’t even be considered a better value. After scratching my head for hours pondering why someone would still purchase such a small vehicle for so much money here in the land of “bigger is better,” I decided to do the unthinkable: I asked someone.

I actually trolled the very Chevrolet lot I pulled the Trax and Equinox price comparison from. It was my very first contact with the Trax, and I have to say, if you weren’t concerned with price, it really is a beautiful car. If the Equinox were a snooty college cheerleader, the Trax would be her little perky high school sister poised to take over her position as the tiny girl they throw in the air. While drooling over the 3-inch think metallic paint coating the body, an older gentleman about 60-ish and a younger salesman strolled over to the Trax to have a look. The three of us carried on a conversation for a while, and I found out the older gentleman was self-made, and had recently retired. He had amassed a sizable investment portfolio and was in the market for a vehicle to pull behind his brand spanking new rock band tour bus. Well, he called it an RV, but I saw a picture. The thing could have been a tour bus for The Dave Mathews band, complete with a guest suite and crew quarters. Needless to say, money wasn’t a concern for this gentleman who just wanted something small, yet fun and well appointed to put around golf courses and Piggly Wiggys in southern Florida while enjoying the fruits of 40+ years of hard work.

After watching the gentleman explain he had to make one quick phone call (I’m assuming his wife had the final say when spending over $25,000) before writing the check in full, it struck me like a Dave Mathews band tour bus. The Chevy Trax and Jeep Renegade of today has become the Suzuki Sidekick and Geo Tracker of the mid nineties. Whether it’s the same stylish runabouts appealing to patrons enjoying their golden years, or rugged and reliable go-anywheres used to get to work in any season and the occasional off-road weekend trek, or even chromed-out luxury compact SUVs with custom gigawatt sound systems and 24-inch wheels. Any way you look at it, these cool little crossovers are becoming quite the trend, just like the seemingly impractical compact SUVs of the past. The Suzuki Samurai was misunderstood when it was introduced as well, but try and find a decent example today under $5,000. Only time will tell if the Jeep Renegade will hold its value or become a collector’s item in 20 years, but for now, I’m enjoying watching where the trend goes from the driver’s seat of my Suzuki SX4 and my debt-to-income ratio precisely where it needs to be.


Dee Paolina said...

Chevy Traxs (exactly what is the plural of Trax?)

What is the plural of "tax?" :-)

nlpnt said...

To me, the Trax/Equinox comparison isn't as compelling as the Trax/Sonic one. I found a $23,540 MSRP on for the 1LT Trax vs. $19,670 for a comparably equipped (LT, 1.4T auto) Sonic hatch. The Trax is a newer entry so it has less of the usual sweet, sweet Chevy cash on the hood, but since it's not *new* (it's been on the market outside the US since 2010) it probably will get replaced at around the same time.

Honda's the same story, a base manual 2wd HR-V runs $19,115 while a base manual Fit lists at $15,790. Both are new models and Hondas sell closer to list than Chevys so that's a $3200 fee for being able to say you drive a "crossover" not a "hatchback".

Mazda's dropped the 2 but it was close to 5 grand cheaper than the $19,500 or so a base CX-3 runs which is only a payment or so off what the seriously nice Mazda 3 hatch runs with an auto (if you want manual from Mazda, it'll be in a real car and your base 3 hatch'll be over $500 cheaper than the base CX-3).

Jeep gets a pass because not only does Jeep itself not have a real B-segment car, but FCA doesn't (do I compare it with the A-segment, two-door-only 500, the borderline C-segment 500L or the sedan-only Dart?