The crossover utility vehicle (crossovers) market emerged in response to, and most likely caused, declines in larger sport utility vehicle sales. The term "crossover" is a one-word moniker for a sport-utility that uses a car chassis. As of February 2006, there were 41 crossovers on the road. The crossover market is growing as automakers and the media alike insist on using the word "crossover" to describe a group of vehicles that come in all shapes and sizes; and one that will multiply into even more shapes and sizes in the future. In 2007, 57 new vehicle models are entering the market; 19 of them are crossovers. Sections I and II of this paper examine demand and supply and market structure for crossover vehicles. Section III provides a summary of macroeconomic variables in 2006 and looks at their effect on General Motors. Lastly, section IV examines the Federal Reserve's actions to affect GDP, inflation, and unemployment and outlook for 2007.
In 2000, just 541,000 crossovers were sold, compared to 2.97 million SUVs. Crossover sales grew to 1.6 million units for the period of January to October 2006, a 5.2 percent increase from 2005 and topping off at 2.2 million at year end 2006. In 2006, the Toyota Highlander was the leader in the midsize crossover segment, with 35 percent of U.S. sales. Depending on one's definition of a crossover, prices generally range from $18,000 to about $45,000 before getting into the luxury crossover territory. I estimate annual sales for 2006 at $54.9 billion. Today, virtually every automaker has a crossover on the market.
Section I ? Demand Function
The quanti ...