Americans are buying sport utility vehicles (SUVs) at record levels, delivering a major boost to automakers’ profitability. Now, a shift in insurance pricing is also making these larger vehicles increasingly affordable to own, narrowing the cost gap with traditional sedans.
SUVs accounted for 52% of new vehicle sales in 2025, up sharply from 46% in 2021 and 38% in 2016, according to data from Good Car Bad Car. Full-size SUVs have seen particularly strong gains, doubling their market share over the same period to reach 3.5%.
The surge in demand has been a windfall for car manufacturers. SUVs and trucks typically generate profit margins that are 10% to 20% higher than smaller cars, as they command higher prices while sharing many of the same components. This profitability advantage has prompted major U.S. automakers to shift production away from less lucrative electric vehicles in the near term and toward high-margin models.
Bank of America analysts recently reiterated a positive outlook on the sector, highlighting Ford and General Motors as top picks. The firm pointed to improving earnings potential driven by a strategic pivot away from electric vehicles and regulatory pressures that had previously constrained margins. Analysts also noted that changes in the regulatory environment could further support automakers’ focus on their most profitable SUV and truck segments.
While manufacturers benefit from higher margins, consumers are increasingly seeing financial advantages as well—particularly in insurance costs.
Insurance providers calculate premiums based on vehicle type, safety performance, and repair costs. Vehicles that are considered safer and less expensive to repair tend to carry lower insurance rates. Analysts at CarInsurance.com found that SUVs are now overtaking sedans in affordability, largely due to favorable claims data and structural design differences.
Among the cheapest vehicles to insure in 2026, SUVs dominate the rankings. The Subaru Crosstrek leads the list with an average six-month premium of $1,150, followed closely by the Jeep Wrangler at $1,154 and the Honda CR-V at $1,158. Other affordable models include the Volkswagen Tiguan and Mazda CX-5, both with premiums below $1,200 for six months.
In fact, 16 of the 20 least expensive vehicles to insure are SUVs. By comparison, the most affordable sedan—the Subaru Legacy—carries an average six-month premium of $1,265. Overall, sedans now cost roughly 10% to 15% more to insure than comparable SUVs.
The Crosstrek’s position at the top of the list reflects its strong safety ratings and relatively low repair costs, factors that heavily influence insurance pricing. Subaru also placed another model, the Outback, among the top 20 cheapest vehicles to insure.
“Repair and replacement costs are a huge factor for insurance rates,” said Zach Lazzari, founder of Cross Border Coverage. He noted that some vehicles require full panel replacements even for minor damage, while others can be repaired more simply and cheaply—differences that significantly affect premiums.
Safety perceptions also play a key role in SUV popularity. Their larger size and higher ride height can offer better protection in collisions, as increased mass may reduce the force transferred to occupants. SUVs also tend to perform better in multi-vehicle accidents and are less vulnerable to certain side-impact crashes due to their elevated structure.
However, these advantages come with tradeoffs. Smaller vehicles typically offer better handling and maneuverability, which can help drivers avoid accidents altogether. SUVs, by contrast, have a higher center of gravity, increasing the risk of rollovers—especially during sharp turns or high-speed maneuvers.
Despite these risks, the combination of strong safety perceptions, rising demand, and now lower insurance costs is reinforcing SUVs’ dominance in the U.S. auto market, reshaping both consumer preferences and automaker strategies.
