Nov. 16 (Bloomberg) -- Ford Motor Co., once the top seller of sport-utility vehicles in the U.S., has redesigned its rugged Escape SUV into a sport wagon to attract buyers who now drive Honda Motor Co.’s CR-V model.
Ford and Honda will introduce reworked versions of their top-selling SUVs at the Los Angeles Auto Show today. Ford’s 2013 Escape has a European “cute ute” design and its rounded edges bear little resemblance to its predecessor’s truck-like look. Honda made only “evolutionary” design changes to the CR-V, said Michelle Krebs, an analyst with auto researcher Edmunds.com.
The Escape and the CR-V lead one of the fastest-growing automotive segments. Buyers seeking better fuel economy without giving up cargo space are downsizing to small SUVs, which account for 11 percent of U.S. auto sales this year, up from 6.7 percent five years ago, according to researcher LMC Automotive.
Ford “saw that they needed to freshen up the Escape’s look,” said Jeff Schuster, an LMC analyst based in Troy, Michigan. “While it’s going the route of more of a cute ute, it still retains an assertive look and edgy styling.”
Ford also is emulating the CR-V’s fuel economy by dropping the Escape’s V6 engine and boosting mileage by as much as 5 miles per gallon. While Ford declined to give mileage data, a 5 mpg improvement would raise the least-efficient Escape to 25 mpg in combined city and highway driving, matching the lowest-rated current CR-V.
Though Escape is Ford’s second-best seller, with U.S. sales up 31 percent this year, the new styling was necessary to continue to attract buyers, said Erich Merkle, the company’s sales analyst.
In the past decade, Ford stuck with a truck-oriented design on the Explorer SUV to keep sales robust on the high-profit model. Instead, Explorer deliveries dropped until Ford gave it a car-like, fuel-efficient redesign last year, he said.
“We’re not waiting for the market to destroy the Escape,” Merkle said. “We’re going to destroy it and reinvent it.”
The Escape outsold the CR-V 206,896 to 180,361 in the U.S. through October, according to researcher Autodata Corp. of Woodcliff Lake, New Jersey. The CR-V outsold the Escape for the previous five years. Ford trails General Motors Co. in sport-utility vehicle sales so far this year in the U.S.
“This is going to be a real horse race,” said Krebs, who has seen each new model. “They’ve both added flair and character lines and upped the ante in technology. But Ford stretched more.”
Home Run Needed
Honda CR-V buyers don’t typically consider an Escape, said Sage Marie, the automaker’s manager of product planning who helped develop the new model.
“We don’t get a lot of cross shopping with the Escape, when people cross shop the CR-V, it’s with the RAV4” from Toyota Motor Corp., Marie said. “There’s no doubt we’re in the sweet spot in terms of size and fuel economy. The Escape has been more of a boxy SUV.”
The new CR-V goes on sale in December, while Ford said it will begin selling the Escape in the first half of next year.
The success of the new CR-V is critical for Honda following lackluster reviews and production delays for the 2012 Civic and weaker-than-expected sales of Insight and CR-Z hybrids.
“Honda is certainly in need of a home run,” Schuster said.
Women are the main buyers of compact SUVs in the U.S. and CR-V has done particularly well attracting them, said Alexander Edwards, president of the automotive division of Strategic Vision Inc., a San Diego-based research firm.
“CR-V has one of the highest instances of female buyers, about 55 percent this year,” Edwards said. For Escape, the current average is 51 percent, he said.
Ford has little to lose in abandoning the traditional SUV look in favor of the style already found in the designs of the CR-V, Hyundai Motor Co.’s Tucson, GM’s Chevrolet Equinox and Toyota’s RAV4, Edwards said.
“You’re seeing the casting off of the legacy of the traditional SUV,” said Jeremy Anwyl, chief executive officer of Edmunds, based in Santa Monica, California. “What we are seeing here is basically station wagons, but we can’t call them that. They should be called comfort utility vehicles instead of sport-utility vehicles.”
Some automakers avoid calling their vehicles “station wagons,” because consumers don’t like the name.
To increase cargo space, Ford made the Escape 3 inches longer and 1 inch wider, said Eric Loeffler, the model’s chief engineer. That made the Escape heavier, though Ford declined to say how much weight was added.
To overcome the added weight and improve fuel economy, Ford is offering three 4-cylinder engine options, including two versions of its “EcoBoost” powertrains that improve mileage by up to 20 percent with direct-fuel injection and turbochargers. A 2.0-liter EcoBoost that generates 237 horsepower and can tow 3,500 pounds replaces the V6 currently offered on the Escape.
Ford also is offering convenience technologies, such as a motion sensor that opens the tailgate when the driver carrying the key fob kicks a foot beneath the rear bumper. The Escape also offers automated parallel parking.
Fuel economy on the new CR-V rises to 23 mpg in city driving and 31 on the highway for the front-wheel drive version from 21 and 28 for the current model. The new all-wheel drive CR-V averages 22 and 30, compared with 21 and 27 for the previous model.
When connected with Blackberry and Droid smart phones, the new CR-V can stream music from Pandora Radio, read incoming text messages and convert spoken replies in response, Honda said.
Neither Ford nor Honda has revealed prices for the new SUVs. Starting prices for the current CR-V range from $21,895 to $26,845, according to Edmunds. The 2012 Escape starting prices go from $21,440 to $33,080, including hybrid versions, according to Edmunds. Honda doesn’t offer a gasoline-electric CR-V.
As Ford seeks new buyers with its sleeker SUV, it also may ask them to pay more for all that new technology, Krebs said.
“The current Escape has very high fleet sales and rich incentives,” Krebs said. “The question is: Will higher prices on the next Escape scare people away?”
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