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Post Chrysler expects minivan sales to aid its future

Over 26 years, multiple corporate owners and increased competition, the one constant at Chrysler has been the minivan.

And while it and the Auburn Hills automaker have suffered through years of decline, Chrysler Group LLC and its new management team from partner Fiat SpA have put renewed stock in the family hauler. Chrysler needs the “magic wagon” to restore profits to the company and to buy time as it merges its products with Fiat.

“With more than 120,000 Chrysler Group minivans sold so far this year, the profitable and substantial minivan business plays a crucial role to our long-term success,” said Peter Fong, head of sales and the Chrysler brand.

The company’s new chief executive officer, Sergio Marchionne, also has thrown his support behind the minivan. He surprised the industry recently when he restored the third shift of minivan production at the Windsor plant, the sole global source of the Chrysler Town & Country and Dodge Grand Caravan for North America and the Chrysler Grand Voyager for international markets.

With little new product from Chrysler and more than a year before the first Fiats are likely to be sold in the United States, Chrysler is relying on breadwinners like the minivan to generate cash.

Chrysler, like its crosstown rival General Motors Co., had to beg for federal aid to stay afloat. Chrysler got more than $15 billion in financing from the U.S. and Canadian governments to help it restructure and emerge from bankruptcy this summer. But the automaker went months without building vehicles and saw sales plummet, dropping almost 40 percent this year. The company’s overall market share has fallen below 10 percent.

Chrysler, which maintains a 40 percent share of the minivan market, is looking to increase its lead. The segment may be down but it is not out, analysts said.

Minivans are forecast to maintain a 3 percent to 4 percent share of the market through 2016, said John Sousanis, director of information content for Ward’s AutoInfoBank.

That’s about half of what it was in 1994 and 1995 when minivans accounted for roughly 8.5 percent of the market, but there are signs — including the re-entrance into the market by Ford Motor Co. and GM — that minivan trends are turning.

Also, the rapid growth of crossovers that diverted consumers from minivans has slowed, and the minivan is finding favor as an economical vehicle.

“Consumers would need to pay approximately $4,000 over the price of a typical minivan to purchase a comparable equipped midsize SUV, which are the closest alternative to minivans in terms of utility and value,” said Juan Flores, director of vehicle evaluation, in a Kelley Blue Book report.

Chrysler also sees opportunity in international markets, where its minivans have barely scratched the surface, selling fewer than 69,000 last year. It can expand that with Fiat’s strong distribution network.

Analyst Jim Hall of 2953 Analytics in Birmingham said he thinks Fiat will replace its European minivans with Chrysler-based ones.
Still a market for minivans

Americans bought more than 1 million minivans annually from 1993-2005, and most of those were made by Chrysler. The first to roll off the assembly line in Windsor on Oct. 8, 1983, a blue Plymouth Voyager with wood trim, started the revolution.

The “people mover” is credited with saving then-Chrysler Corp. from the edge of bankruptcy, and it could play a savior role again.

An August market analysis by Kelley Blue Book found used cars continue to depreciate, but minivans appreciated by almost 5 percent — the highest of any sector.

With no new minivans expected this year, “minivan values should remain strong for the foreseeable future,” Flores said.

Also, people are still shopping for minivans, said James Bell, KBB market analyst in Irvine, Calif., and they see only three credible choices: a Chrysler, Honda Odyssey or Toyota Sienna.

Chrysler made the top-selling minivan until last year, when the Odyssey took the top spot. But Chrysler’s total minivan sales remain highest.

Chrysler has always been aggressive in improving its minivans to maintain that dominance, said spokesman Rick Deneau.

Notable innovations include Stow ‘n Go seats and, more recently, swivel seats.

Bankruptcy, however, slowed product development.

“We were surprised by how little (product development) had been done in the past 24 months,” Marchionne said in Frankfurt, Germany, last week.

Now that the company is out of bankruptcy, much is expected of the minivan.

“Chrysler has two bullets in the drum: minivans and Ram. They haven’t got anything else,” Hall said.

The first step, he said, is for Chrysler to capitalize on its ability to offer a lot of value for the money and to blast immediately into new international markets. To that end, the Windsor plant this month started making minivans with diesel engines and right-hand-drive for export.

For export, the automaker is looking at the return of a short wheelbase model, Hall said, but Chrysler is grappling with how it would brand multiple models. One scenario would keep the larger minivan a Chrysler and badge the smaller one a Dodge, Hall said.

The smaller van, likely based on the underpinnings of future Fiat and Chrysler compact/midsize cars, would join a growing movement to mini-minivans.

Today, the only U.S. choices are the Mazda5 and Kia Rondo. But there are more to come. Ford will bring the seven-passenger C-Max to the United States from Europe in 2011. Based on the Ford Focus, the C-Max has sliding doors and fold-flat rear seats and would mark Ford’s return to the minivan segment.

GM will introduce the Chevrolet Orlando in 2011, based on the Chevy Cruze.
Family hauler at right price

Minivans still matter to people like Earl Simpson of Crestview, Fla.

He recently offered to help his daughter buy one and recommended a Honda or Toyota, but she said the Japanese models were overpriced and insisted on visiting a Chrysler dealership. Eventually, it was Simpson who walked out the door with keys to a shiny red Grand Caravan. About 10 days later, his daughter bought a red Town & Country.

“Quality and price is what nailed it,” said Simpson, who tests equipment for pilots at Eglin Air Force Base.

The segment may be smaller, but the minivan remains a profitable vehicle, said Michael Robinet, vice president for global vehicle forecasts for CSM Worldwide in Northville. “For the money, the minivan is still the most practical family vehicle you can have,” he said.

Ward’s Sousanis said he thinks the minivan will come back into vogue. So does Chrysler’s Fong.

“Chrysler is committed to the future of the minivan,” Fong said, “and we will continue to innovate the best minivans to haul people and things for generations to come.”



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