2005 Toyota Highlander Preview

The Explorer Killer

With a car-like ride and truck-like utility, Toyota's latest SUV might be Ford's worst nightmare.

Despite rising gasoline prices, Americans are still buying SUVs at a steep clip. And the most likely first-time SUV buyer is, perhaps surprisingly, not driving a Toyota Tercel but is instead trading out of a midsize sedan like the Ford Taurus, Toyota Camry or Honda Accord. 

In fact, owners of midsize cars are five times as likely to trade them in for an SUV than they were just two years ago, according to a recent survey by J.D. Power and Associates. Tom Libby, an analyst for J.D. Power says that his company predicts that by 2006 "sport utilities will replace midsize cars as the most popular vehicle in the country."

All of which comes as no surprise to Toyota, which took a look at the exodus from midsize cars a few years ago and decided it had to build two new SUVs, the midsize Highlander and the full-size Sequoia, to fill increasing demand. After all, fully half of the sales that boosted Toyota's upscale Lexus division to the top of the luxury-car ladder for 2000 were from its RX 300 model -- basically a tall Camry with more stately appointments.

So think of Toyota's new Highlander as the RX 300's slightly less dashing but bigger brother, with a similarly car-like ride (since, like the RX, it's built on a unibody rather than truck platform), more interior space and a lower price tag -- $26,495 for the four-wheel-drive Highlander versus $36,200 for the all-wheel drive RX.

Is the Highlander as capable off-road as a truck-based SUV with a low range? No, of course not, but in reality almost no SUV owner engages four-wheel drive except on snowy pavement. Put another way: When was the last time they built a shopping mall at the top of the Grand Tetons?

The Highlander then, like so many SUVs, is a station wagon in another guise, an unabashed family car meant for quotidian duties like ferrying the kids to their soccer matches and bringing the whole clan to Grandma's for Sunday brunch. But just how good a family car is it?