Minivans Reach the Point of Reckoning
Can Chrysler's New Vans Stop the Segment's Slide?
Minivans have become the Rodney Dangerfields of the automotive world: They get no respect — but a lot of people like them.
Some automakers, many industry pundits and millions of American consumers seem to have written off minivans for good. Lacking the stylishness of the hot new crossover genre and suffering from a lack of new-product news, minivans have seen their sales fall off dramatically in 2007 and the downward momentum is building.
"They have gotten a little bit of that station-wagon-type stigma, and crossovers have improved so much that it's hard to see minivans making a comeback," said Paul Ballew, executive director of market and industry analysis for General Motors.
Yet there are reasons to believe that sales of the Chrysler Town & Country, Dodge Grand Caravan, Honda Odyssey, Hyundai Entourage/Kia Sedona twins, Nissan Quest and Toyota Sienna can remain viable, collectively, for the long term.
The reasons for optimism start with the inherent strengths of minivans: utility, convenience, flexibility, drivability and fuel economy, all of which remain unmatched in combination by most SUVs and crossover vehicles. By this fall, Chrysler intends to enhance those strengths by debuting overhauled 2008 models. Honda will be giving the Odyssey a minor refresh as well.
"In terms of raw, efficient carrying of people and stuff, there's still nothing better — there just isn't," said Steve Bartoli, Chrysler's vice president of global product marketing. "And some people will always appreciate that."
For Minivans, It's Been a Great Ride
From the day that former Chrysler CEO Lee Iacocca introduced this completely new vehicle type in 1984 after borrowing the concept from his days at Ford Motor Company, minivans have enjoyed a great ride. They almost single-handedly restored Chrysler in the '80s. Minivans created a new industry segment that boomed just as boomers were having kids to fill them.
They offered a car-smooth, front-wheel-drive ride, and fuel economy that could bust 30 mpg on the highway. Further, their sliding doors provided by far the easiest way to get babies and small children in and out of vehicles, and once everyone was inside, there was legitimate seven- or even eight-passenger comfort. Plus, minivans carried a sensible, wholesome image of parenthood that became an integral part of their appeal.
At some point, soccer moms and minivans became synonymous. And in another beneficial twist, many grandparents bought minivans. Even today, from 25-40 percent of minivan sales, depending on models, are to customers 60 years old and older, according to Toyota.
Import brands validated the category and penetrated the market during the late 1990s and early years of the 21st century. The Honda Odyssey and Toyota Sienna emphasized interior amenities, not least of which was the Odyssey's revolutionary fold-flat third-row seat, along with overall quality. During its 2004 redesign, the Nissan Quest brought what has passed for innovative exterior styling to the category — "It's been more polarizing than we'd have liked," Ken Kcomt, a Nissan product planning director, admits. The Quest also ushered in interesting innovations like skylights over the rear seats.
But GM and Ford never got significant traction in the segment despite decades of efforts and essentially gave up on minivans by the beginning of this decade. Meanwhile, the Japanese automakers also began to put more resources into other categories.
Then, as boomers aged, demographics began to work against the segment. As gas prices eased, SUVs took over as the preferred family-hauling vehicle for many Americans — especially because they came without the minivan image that had become stodgy. Now, new crossovers such as the Buick Enclave/GMC Acadia/Saturn Outlook triplets and Mazda CX-9 offer the biggest challenge yet, from another segment, to the appeal of minivans, including a carlike ride and easy access to a third row of seats that's large enough to accommodate teenagers and even adults.
"When minivans became popular, they were the only things that were packaged that way," said Art Spinella, president of CNW Marketing Research, a Bandon, Oregon-based automotive research firm. "Now, minivans are being diluted by at least two or three other segments of the market."
And very recently, minivans have slipped to where once-worthy vehicles go to die: the daily rental market. "Almost 50 percent of Grand Caravan sales are to daily rental, and this year Grand Caravan is the No. 1 product sold there," noted George Pipas, sales analyst for Ford.
Lately, minivan sales have reflected the strain on the segment, easing from 1.16 million in 2005 to 1.08 million last year, according to Chrysler. So far this year, sales have declined another 17 percent; in May alone, the drop-off was 24 percent, cutting minivans' share of the overall U.S. new-vehicle market to just 4.9 percent to date in 2007 from 6.5 percent for all of 2006.
Neither is this just a problem of Chrysler's aging products: Sales of the No. 2 make, Odyssey, declined more than 10 percent so far this year compared with 2006. Meanwhile, Sienna sales have increased by more than 9 percent.
New Products, Demographics Will Determine the Future
Yet, Town & Country and Grand Caravan sales have tanked this year in part because Chrysler is readying the 2008 models for introduction — and expecting a big uplift from them. For one thing, Chrysler expects to pack a wallop by attaching deep price cuts to the new versions right out of the blocks — as much as $3,385 below the sticker prices on current models.
The company also is touting what it numbers as 35 added features in the 2008 Grand Caravan and Town & Country. Chrysler has regularly improved the style, quality and functionality of its minivans over the years, with enhancements such as the Stow 'n Go fold-down second- and third-row seats that debuted in 2005.
This time around, noteworthy new features include a front-center storage console that slides back and cantilevers so second-row occupants can use it. An optional new DVD-entertainment system can play different discs on separate second- and third-row screens. And though more and more kids actually have portable DVD players and iPods that will play videos, Chrysler's Bartoli boasted that this feature "will totally change how kids think about entertainment in the car."
Second-row seats swivel for easier entry to and exit from the vehicle, and to set up a conversation pit with third-row occupants. A removable table can sit between the two rows for game-playing or for sharing snacks.
But some rivals doubt those features will have much appeal. Volkswagen's EuroVan sported the same setup but never caught on in the United States, and Toyota's Previa (which has given way to Sienna in the U.S.) had second-row seats that could face rearward. "Customers felt more comfortable facing forward while the vehicle was moving," said Mark Amstock, national SUV and minivan marketing manager for Toyota. "And once you reached your destination, people want to get out, not sit in the back playing cards."
Moreover, one significant drawback for Swivel 'n Go is that you'll have to forego Stow 'n Go seats if you choose the former as an option: Because of space-design restrictions, the two features are mutually exclusive.
All minivan producers also are counting on an uptick in interest from the so-called Millennials generation, the offspring of boomers, who were born from about 1977 through 1998. "They're family-oriented and they're more practical than those who came just before them," Bartoli said. "And the minivan remains the most fuel-efficient, cost-effective way of transporting a family of four or more."
Added Amstock: "Where are people going to go as they leave large SUVs because of gas prices? There are only so many places you can go if you have large families."
But, as Spinella noted, the Millennials generation is only about 70 percent the size of the boomer generation. "Interest remains fairly good in the age group that would be oriented toward minivans," he added. "But the framework is that you're dealing with a much smaller base."
If they can continue to sell around 1 million minivans annually for the next few years, automakers will be happy. They seem confident they can. Bartoli, for example, recalled that "people said the segment was dead" in the mid-1990s — but that was just before Chrysler debuted a driver-side passenger door and revived sales. "Are we on the precipice again? I don't think so."
Dale Buss is a journalist based near Detroit.