SUV lite: Crossovers kept the look and space, with soft ride of cars

Toyota, usually a follower, creates a segment

It had been 14 years since an automaker had shocked the world and created a vehicle segment. In the early 1980s, Chrysler unveiled the minivan, spawning hordes of imitators. The industry had been relatively stagnant since then.

But Toyota — careful, cautious, never-first-but-always-best Toyota — wanted to gamble on a segment-buster of its own.

With U.S. buyers leaping into the SUV segment by the hundreds of thousands, Toyota took a risk on a slightly more mild-mannered vehicle that was a bit less capable but a lot more comfortable.

And — after heated internal debate and some lingering skepticism — the vision of the mass-market crossover took shape.

A few small SUVs on car platforms, such as the Toyota RAV4, Honda CR-V and Subaru Outback, already were on the market. But they were small, low-volume vehicles dismissed as wagons or cheap toys for entry-level buyers. No one had tried adapting a mid-sized sedan platform for the mainstream SUV market. Automakers figured a shopper with money would always buy a rugged body-on-frame SUV that could conquer the Rubicon Trail.

But a group of Toyota engineers and product planners thought differently. In the early '90s, some SUV owners began expressing disenchantment with the rough ride, balky handling, poor fuel economy and cheap interiors of the typical body-on-frame SUV. It seemed to be a case of Stockholm Syndrome, SUV style.

"The SUV segment was a very rich demographic, where wealthy and successful people were migrating," says Chris Hostetter, vice president of advanced product strategy and product planning for Toyota Motor Sales U.S.A.

"We were amazed at how many women were buying these gussied-up pickups with terrible ingress and lousy handling. We had a tremendous opportunity," Hostetter says.

WADA LEADS THE WAY

Leading the development charge was Akihiro Wada, Toyota Motor Corp.'s head of r&d.

"Our goal was to achieve the same driving performance as a passenger car," Wada said in a recent interview. "Actually, we wanted it to have the same characteristics as the Camry."

But it wasn't an easy sale.

Jim Press, who at the time was general manager of the Lexus Division, remembered driving a Land Cruiser to dinner in Los Angeles with Wada and Hostetter when Wada first broached the idea of a car-based SUV for Lexus.

"He was very insistent that you could build in as many rugged qualities as the customer wanted and that the inefficiencies of body-on-frame SUVs were going to catch up with them," Press said.

The problem was that Toyota was going to introduce a rugged redesigned Land Cruiser, as well as a sibling Lexus LX 470, at about the same time in 1997. Press didn't see the logic in Wada's contention. The two jousted.

"We felt bigger is better. I was as stubborn as anyone about this," Press said. "All the while Wada is saying: 'You're all nuts. Why haul around a truck when no one is using the truck?' "

Wada ended up carrying the discussion. But Press convinced Wada that such a vehicle needed at least to have an aggressive look, rather than appearing like a tall station wagon.

As early development continued, a contingent wanted to soften the rugged body-on-frame 4Runner to cut cost, rather than create a vehicle from scratch. But product planners concluded that would be the worst of both worlds: not delivering the soft ride of a car-based SUV, while declawing the 4Runner.

NO LOW RANGE

It was decided that the RX 300 would be based loosely on the Toyota Camry/Lexus ES 300 sedan platform, although its underlying mechanicals would have more in common with a Toyota RAV4 and Celica All-Trac. Because of the engine and seating locations, the vehicle floorpan, suspension and subframe would be unique.

There would be no low-range gearbox or locking differential. But Wada figured the most intense low-speed driving its upscale customers would demand would be across a snowy road, a camping area or the beach. First gear and all-wheel drive would be sufficient.

Then there were the comfort factors.

"I decided we needed to target the ES 300, instead of any SUV, for noise, vibration and harshness," said Tsuneo Uchimoto, the RX 300's chief engineer, who was given 24 months to create the vehicle.

"That was a very surprising decision, especially for the engineer in charge of NVH. It was beyond his imagination," said the soft-spoken Uchimoto, now senior managing director of corporate r&d at Aisin Seiki Co.

There were numerous other issues. The original prototypes didn't have enough interior room for Lexus customers, prompting a late interior redesign. The location of the gearshift, jutting out from the center console, was controversial. Because the vehicle would be sold in Japan, it needed to be narrower than the U.S. staff wanted. There were debates about whether to launch the vehicle only with all-wheel drive or openly admit its lack of tough-guy credentials by offering a front-drive model as well.

TAKING ON THE MAINSTREAM

In launching the RX 300 in March 1998, Lexus aimed at the heart of the SUV segment — against muscular off-roaders such as the Jeep Grand Cherokee and Ford Explorer.

There was no guarantee that U.S. buyers would embrace the new vehicle. It didn't help that Mercedes-Benz had just launched the capable-but-civilized body-on-frame ML 300 SUV just a few months before.

At the press introduction in Whistler, British Columbia, more than a few jaded journalists pronounced the vehicle "a snow-bunny car" that would flop. Lexus itself presented a conservative sales estimate of about 25,000 units a year.

"It was nerve-racking, because this is a male-oriented business, but we were moving toward female needs," Press said. "Macho guys want a sporty car and a tough truck. No one wants to get out in front of the media and say, 'We love this soft-riding vehicle.'"

Hostetter walked away from the press intro doubting his own research, thinking to himself, "Why do you take on these risky concepts?"

But Lexus marketers sold the vehicle on its comfort and convenience, and scads of soccer moms lined up to buy it. Despite a March launch, the RX 300 sold 42,191 units in 1998, well over its target. In 1999 it became Lexus' best-selling vehicle, tripling its initial sales estimate.

ONE-HIT WONDER?

Even with the success of the RX 300, there were Toyotans who thought the vehicle was a one-hit wonder that wouldn't translate into mainstream success. The Toyota version of the vehicle, to be called the Highlander, was forecast only to account for niche sales.

Says Hostetter: "Management was doing the sales plan, and they 'zeroed out' the Highlander. They said: 'Highlander is not a real truck. We already have the 4Runner.'

"It was a real conflict. We had to figure which one was going to be our primary product. CAFE was going this way, and we needed to reduce weight. All the dimensions pointed to success, but it was a push to get Highlander into the lineup."

Today the successors to the original Highlander and RX 300 each sell far more than 100,000 units every year. The redesigned RX 330 is such a suburban star that Lexus decided to build it in North America, the only Lexus with such an honor.

What's more, the vehicles spawned a segment of imitators. Nearly every automaker now has a car-based SUV — or crossover, as they have come to be known.

Press, who was the top Toyota executive in America until his recent departure for Chrysler, said he is not chagrined that he couldn't initially see Wada's vision. He just needed some convincing.

"You don't do product planning based on what other people are doing," Press said. "You do it based on the future, and that people don't know what they want."

You can reach Mark Rechtin at mrechtin@crain.com. -- Follow Mark on