Passenger room includes all people-seating areas, so if a vehicle has three rows of seats, it naturally will have more passenger volume. The three-row 2013 Toyota Highlander SUV, for example, has 145.7 cubic feet of passenger volume, and the two-row 2013 RAV4 has 101.9 cubic feet.
With the Highlander, when all three rows are in use the cargo volume left at the rear is a skimpy 10.3 cubic feet. Add that to the passenger volume capacity, and the Highlander has total interior cabin volume of 156 cubic feet under the EPA’s measuring standards used to place vehicles in size categories.
Fold the Highlander’s third row seating and cargo volume increases to 42.3 cubic feet. Fold the second row seating as well and the cargo space behind the front seats grows to the maximum total of 95.4 cubic feet.
Increasing cargo volume by folding seats, of course, reduces the number of passenger the vehicle can carry by corresponding amounts. If you reduce the number of seats, then you decrease the passenger capacity.