Toyota Says RAV4 Small SUV Will Dethrone Camry as Its Top Seller

  • Children of baby boomers prefer SUVs over family sedans
  • U.S. sales chief: `I'll bet you lunch that will happen'

The 2016 Toyota RAV4 Hybrid sport utility vehicle.

Photographer: Michael Nagle/Bloomberg

The Toyota Camry, the top-selling car in America for the last 13 years, may have finally met its match: The Toyota RAV4 compact sport utility vehicle.

Bob Carter, Toyota Motor Corp.’s top U.S. sales executive, predicted today that the RAV4 will outsell the Camry within the next five years as millennials, the children of the baby boomers, embrace small SUVs as the new family car.

“I’ll bet you lunch that will happen,” Carter told reporters Thursday at a Toyota holiday party in Detroit. “Many of these under-35-year-old buyers, who are entering the market in a big way right now, grew up in SUVs.”

Compact SUVs such as the RAV4, Honda CR-V and Ford Escape now outsell mid-sized sedans such as the Camry and Honda Accord, Carter said. This year, Toyota will sell more than 300,000 RAV4 models and about 425,000 Camrys in the diminishing family sedan market, Carter said.

To meet growing demand for RAV4, Toyota has begun importing some from Japan to supplement those it builds in Canada, Carter said. Toyota is adding a second plant of RAV4 capacity in Canada, which will give it the ability to produce more than 400,000 a year in North America, he said.

“There’s a really dramatic shift in consumer preference going on,” Carter said. “Five years ago, if somebody would have said compact SUVs would be outselling mid-size sedans, I probably would have disputed that.”

New Look

Toyota, the world’s largest automaker, redesigned the RAV4 for 2016, adding hybrid and sport versions and offering more all-wheel-drive options.

RAV4 sales soared 30 percent last month and are up 16 percent this year to 283,546 models through November. Camry sales rose 7.3 percent last month, but are down 1.2 percent for the year to 392,056 models.

Millennials and baby boomers entering their empty nest years are turning to small SUVs because they don’t have the poor fuel economy, high price and rugged ride once associated with off-road vehicles built on truck frames. Modern compact SUVs are derived from the smooth-riding, mechanical underpinnings of compact cars.

“If you look at cars versus SUVs 10 years ago, the question was ‘Do I want lower price, good fuel economy and comfort, or do I want all-wheel-drive, high seating and ruggedness?”’ Carter said. “Compact SUVs, if you take a critical look, have the comfort of mid-sized sedans, they’ve got competitive fuel economy, they’ve got all the amenities and the price is almost the same.”

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