The second way is definitely best. There's no advantage to repeating keywords within an URL, and your first way would smack to me of a webmaster trying to manipulate search engines - not good!
As a general rule when writing URLs, what's best for the user is best for SEO. If I was a user of xyz.com, looked at an URL like xyz.com/dodge/grand-caravan, I'd immediately know what to type in to get to say, a Pontiac Firebird. Repeating things that don't need to be repeated confuses things for your users, and they're ultimately what matter most.
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