Automotive News - March 31, 2008 - (Page 40)

40 • MARCH 31, 2008 As segment shrinks, Chrysler minivan output takes a big dip Bradford Wernle bwernle@crain.com Chrysler LLC is scaling back production of minivans even faster than its sales are dropping in the declining segment. For the first two months of 2008, Chrysler’s minivan production has plunged 30.6 percent overall compared with the same period a year ago. Chrysler’s minivan sales dropped 23.9 percent for the first two months. The production decline hasn’t been evenly balanced between Chrysler’s two minivan factories. Minivan output at the St. Louis South plant has dropped 76.4 percent as the plant went from two shifts to one starting Jan. 2. St. Louis South made only 10,446 minivans for the first two months, compared with 44,211 a year ago. Production at the Windsor, On- tario, assembly plant actually rose 33 percent, from 31,855 for the first two months of 2007 to 44,211 for the same period this year. The Windsor plant is working three shifts. “We’re building four shifts worth of minivans,” said Chrysler spokesman Ed Saenz. Later this year, Chrysler will begin making 2009 Routan minivans for Volkswagen in Windsor. In September, Chrysler began making the Chrysler Grand Voyager minivan at St. Louis South. The Grand Voyager is the European version of the Chrysler minivan. The previous-generation Grand Voyager was manufactured at the Magna Steyr contract assembly plant in Graz, Austria. Chrysler is the only automaker with two minivan plants. Based on 2007 Harbour Report data, Chrysler had the capacity to build 272,976 vehicles at Windsor on three shifts. That number included the now-deleted Chrysler Pacifica crossover. The same Harbour Report data rated St. Louis South capacity at 270,344 for two shifts. Chrysler built 261,571 at Windsor and 138,240 at St. Louis South in 2007. The plants were both down a number of weeks due to the model changeover. c MINIVANS Survivors rewarded with bigger shares continued from cover introducing redesigned minivans last fall. Chrysler is running behind yearago volume because it dropped the short-wheelbase Dodge Caravan, and the automaker has cut back sharply on less profitable sales to rental fleets. “I’m pretty bullish on the segment,” says Steven Landry, Chrysler executive vice president for North American sales. “It’s not going to deteriorate that much.” Winds of change What’s more, the segment’s survivors are commanding better minivan transaction prices. The average transaction has risen from $24,857 in the first quarter of 2003 to $27,500 in the first quarter of this year, according to Power Information Network. Meanwhile, the same winds of fashion that took one-time minivan customers to mid-sized crossovers and SUVs could blow back the other way. “We’re not seeing minivans returning to the days of overall strength, but they still meet the needs of a lot of families,” says Pflughaupt. “Our projections for the minivan segment are stable to where volume is right now.” Like Chrysler, Honda and Toyota minivan sales are down in 2008 compared to last year. But Honda and Toyota sell a lot more vans than they did in 2000, when the segment peaked. Their share of the segment has skyrocketed. In 2000, Ford and GM combined for more than 575,000 minivan sales. Last year GM sold 78,376 units and Ford sold 3,090. The rest of the minivan segment, minus Ford and GM, is as big as ever. Volkswagen will enter the minivan market this fall with the 2009 Routan, made by Chrysler at its Windsor, Ontario, assembly plant and based on the Chrysler minivans. But the Routan won’t make up for the long list of entrants that have departed or are about to: the Buick Terraza, Oldsmobile Silhouette, Saturn Relay, Pontiac Montana SV6, Ford Freestar, Mercury Monterey and Mazda MPV. The Toyota Sienna was the top-selling minivan in the United States during the first two months of 2008. Slip-sliding away Minivan sales peaked in 2000 and have been falling ever since. Minivan race How sales of minivan models stood after the first 2 months of 2008 UNIT SALES JAN.-FEB. % CHANGE FROM JAN.-FEB. ’07 1,500 1,375 Minivan sales, in thousands 1,250 1,125 1,000 875 750 625 0 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 Toyota Sienna Chrysler Town & Country Honda Odyssey Dodge Grand Caravan Chevrolet Uplander Kia Sedona Mazda5 Nissan Quest Hyundai Entourage Total segment 21,668 21,043 20,436 19,167 9,569 4,544 3,720 3,098 915 104,432 –1.0 –9.4 –13.2 –45.2* 15.0** –61.8 28.8 –38.7 –51.0 –23.9 *2007 included now-deleted short-wheelbase Caravan ** Limited production expected to continue into 2009 Source: Automotive News Data Center Source: Automotive News Data Center Minivan Big 3 In 2000, when minivan sales peaked, the segment’s Big 3 were Chrysler, General Motors and Ford. Now the Big 3 are Chrysler, Honda and Toyota. 2007 MINIVAN UNITS 2007 SEGMENT SHARE 2000 MINIVAN UNITS 2000 SEGMENT SHARE new models also are attracting younger buyers. Higher prices, too Chrysler also increased prices. Power Information Network data shows Town & Country transaction prices rose from $25,189 in 2007 to $28,632 in 2008, and Dodge prices went from $22,838 (combined Caravan and Grand Caravan) in 2007 to $25,259 for the Grand Caravan only. The prices were based on sales between Jan. 1 and March 16. Dealers say customers are choosing pricier versions of the minivans. Doug Alley, owner of Alley ChryslerDodge in Kingsport, Tenn., says he had enjoyed a good business selling short-wheelbase Caravans to budgetconscious customers. But customers were less eager to buy stripped-down versions of the 2008 Grand Caravan. “I ordered some of those low-price Grand Caravans, but they’ve not done as well as the SXT with the DVD player,” he said. Like some other dealers, Alley noticed something else about the launch: “When they announced the new 2008 vans last spring, the Town Chrysler Honda Toyota Total segment 314,301 173,046 138,162 807,053 38.9% 21.4% 17.1% 483,813 126,705 103,138 1,371,234 35.3% 9.2% 7.5% Source: Automotive News Data Center Dogfight The rest of 2008 could see a dogfight for segment leadership. The Toyota Sienna is challenging Dodge’s twodecade stranglehold on the sales crown. For the first two months of this year, the Sienna holds a 20.7 percent share, followed by the Chrysler Town & Country with 20.1 percent and the Honda Odyssey with 19.6 percent. The Dodge Grand Caravan has fallen to fourth with 18.4 percent. Dodge has led the field every year since 1996. Chrysler introduced the Dodge Caravan and Plymouth Voyager in 1983. When sales of its two minivans are combined, Chrysler is still the leader with 38.5 percent of the minivan market, down slightly from the 38.9 percent share it held for all of 2007. But the Chrysler Town & Country and Dodge Grand Caravan haven’t hit their stride yet. “We thought the Chrysler minivans would jump-start interest” in the segment, says Jesse Toprak, analyst at edmunds.com. “When the redesigned product hit the market last fall, that didn’t happen.” Town & Country sales have fallen 9.4 percent for the first two months. But Dodge’s minivans dropped 45.2 percent. Chrysler says its sales decline is exclusively because of the elimination of the short wheelbase, which was dominated by fleet sales. “We lost a lot of sales by design when we dropped the short-wheelbase” Caravan, says Michael Accavitti, Dodge brand marketing director. “The customer for the short wheelbase wasn’t the customer we were looking for to grow the business.” Jiyan Cadiz, Chrysler spokesman says: “So far through February, our retail minivan sales are up 8 percent, with over 1,000 new retail customers more than last year.” Chrysler says its & Country was out of the chute much faster. Somehow or another the Town & Country was ahead by two, three, four months in terms of ordering and getting inventory.” Chrysler says there was no problem with the Grand Caravan launch, but Landry acknowledges that the upscale packages on the Town & Country have been more popular with customers initially. Toyota sales have declined the least of the three main players, down 1 percent compared to the first two months a year ago. Honda sales have dropped 13.2 percent. Honda spokesman Chuck Schifsky says it’s no surprise sales have slowed as customers watch for signs of economic recovery. “People may be waiting to purchase until the economy gets shaken out,” he said. “A minivan is less of an impulse buy. Minivan buyers have always been very practical shoppers.” When those practical buyers do return, they’ll find three competitors eagerly waiting for their business. c Mark Rechtin contributed to this report http://edmunds.com

Table of Contents Feed for the Digital Edition of Automotive News - March 31, 2008

Axle strike leads GM to alter production plan Industry expert Ferron joins Automotive News Group Hummer adds E85 models Lear expands in China Ford spills the beans on car seats Concern ... confidence ... curiosity — welcome to America, Tata Expect most Ford-bred executives to stay put Tip for Tata: Let British brands be British brands Dana CEO sees need for growth in Asia Chrysler: Any deal for partner would be done by Cerberus Farley retools Flex marketing strategy Malibu attracts import-minded buyers European purchasing execs to suppliers: Costs must fall Reynolds removes dealership modems New Saturn ads will promote Aura, Vue, Outlook This Spring Hill launch is a fraction of the first one GM works on small global car Hal Riney, Saturn campaign creator, dies Dealer sours on China importer Secret computer lets Nissan planner peek into future XM-Sirius merger: Lower prices, more choices? Key Chrysler product developer resigns Ford's new boss in HR plans no major changes Wagener to replace Pfeiffer as Mercedes design chief It's time to break the glass ceiling Autos don't cause all global warming Toyota plumbed the depths of Scion Customer loyalty is serious business Future bright for Tata brands Dauch sends wrong signals as Axle strike drags Yanase opened Japan to Western cars Fewer dealers, sure, but more brands What if Ahn falls short? Want to inspire Lori Queen? Just say no Hanwha to build GM Powertrain assembly line Toyota enters untapped Korea, home of Hyundai James O'Rourke Jr. Picture This -- March 31st, 2008 Lexus pays dealers for innovations Suppliers to the 2009 Dodge Journey Ricardo center has battery focus Howa USA opens interior parts plant in Kentucky N.Y. show suggests a future of smart powertrains, muscle BMW sees new models as sales saviors Ford contract has unique take on core jobs 6 more PACE-setters in auto innovation Buy-here, pay-here may grow Dealers Mercedes SL: A fresh face — with 1 flaw Ex-Chrysler design chief John Herlitz dead at 65 Future could be bright for Jag, Land Rover Land Rover in good shape, but challenges remain Fuel economy fines loom for Tata As segment shrinks, Chrysler minivan output takes a big dip Mercedes names 27 AMG dealers Continental to cut jobs Cobalt SS price: $22,995 Kia opens Ga. training center Nissan idles Mexico plant Plastech legal bill: $1 million for a month Magna will add 3 plants in Mexico El Camino diehards say Pontiac G8 should have been a Chevy No 2nd chance for Nasser, other Ford alums Buick grabs a name from the past After short list, a short stay for Laymon Lori Queen or Ellery Queen? Daimler's mum on BMW Southern supplier strategy Tracing the Camaro's bloodline Alfa searches for a U.S. factory

Automotive News - March 31, 2008

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