Any discussion about the most popular vehicles in the US has to include the Toyota RAV4. Since January 2019, this compact utility has ranked among the five most popular vehicles in the country for thirty-nine out of forty-four months (see summary below). Moreover, the RAV4 ranked second in retail registrations in 11 of those 44 months, and first this past February.

It therefore is not surprising that in August 2022, the most recent month for which new retail registration data are available, more retail customers opted for the RAV4 than for any other model except the Ford F Series pickup, and the gap between the two was a mere 230 units.

RAV4 has several strengths. One is its longevity in the market: RAV4 launched in the US in 1996, earlier than any other in-market compact car-based crossover except the Kia Sportage, which arrived a year earlier. (Honda CR-V and Subaru Forester came to market in 1997.) And while the RAV4 obviously has gone through numerous re-designs and enhancements, it has gone by the same name throughout its 26-year history, earning coveted model-level equity with US consumers. In fact, 31% of RAV4 households acquire another one, above industry-wide model loyalty of 25% in the first eight months of 2022.

The compact utility also benefits from being part of a strong brand - 57% of Toyota owners who have returned to market so far in 2022 acquired another Toyota, the highest brand loyalty in the mainstream market after Ford; this obviously provides a plentiful source of sales for the RAV4.

The RAV4 also attracts competitive owners at an impressive rate. Looking again at the first eight months of 2022, RAV4's conquest/defection ratio of 1.04 not only indicates a net inflow of customers (for every 104 households conquested by the RAV4 from other models, 100 RAV4 households defect to other models), but it also surpasses Toyota's average ratio of .88 and is second highest among Toyota volume models after the Tacoma. However, it is noteworthy that RAV4 struggles against several competitors, with a ratio below 1.0 (net outflow) with Jeep Wrangler, Mazda CX-5, VW Tiguan, Sportage, and Hyundai Tucson, among others.

Since vehicle prices still rank high with many consumers, it is relevant that RAV4 actual monthly payments are very competitive. Monthly payments for a new RAV4 with a 60-month (or greater) loan averaged $550 August 2022 CYTD, less than the average Compact Utility Segment payment of $580 during the same time period. RAV4's payment is the tenth lowest among the 23 compact utilities for which S&P Global Mobility has sufficient financial data, but still above the payments for such competitors as Forester, CX-5, Chevrolet Equinox, Ford Escape, Tucson and Tiguan.*

RAV4 also benefits from a choice of powertrains, including both the traditional internal combustion engine as well as a hybrid gas/electric offering (Escape, CR-V, Tucson, Wrangler, Sportage, and Nissan Rogue also offer these two choices). RAV4's hybrid installation rate has been rising and reached 58% in Q2 2022, surpassing 50% for the first time (partially driven by the hybrid's impressive combination of fuel efficiency and performance).

Importantly, a RAV4 hybrid buyer will pay just $39 more a month (with a 60+ month loan) than a RAV4 gasoline customer ($569 vs. $530), but the hybrid buyer now has an "electrified" vehicle, very much in vogue these days. In contrast, if the customer acquired the Toyota BZ4X, the electric counterpart to the RAV4, his monthly payment of $810 would be $280 above the gasoline monthly payment.

RAV4 hybrids also bring an indirect benefit to the Toyota brand. Industry-wide, when a hybrid household returns to market, about 13.4% will migrate to an electric vehicle; in contrast, when a gasoline household acquires a new vehicle, only 4% will migrate to an EV (see chart below). In this sense, the hybrid serves as a bridge to a fully electric vehicle, the final destination of the entire US auto industry.

Note: S&P Global Mobility loyalty data cited in this report are derived from the Household Methodology, in which the newly acquired vehicle is not necessarily a replacement for the original vehicle but may be an addition to the household fleet.

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Top 10 Industry Trends Report

This automotive insight is part of our monthly Top 10 Industry Trends Report. The report findings are taken from new and used registration and loyalty data.

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Posted 28 October 2022 by Tom Libby, Associate Director, Industry Analysis and Loyalty Solutions, S&P Global Mobility

This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.