DCX: Minivan Man RIP?
When dairy cows go dry, farmers have them “freshened” (that’s what bulls are for). Chrysler’s long-time cash cows, its minivans, have gone dry. After an eleven year hiatus, the bulls have been busy. The embattled carmaker will reveal the long overdue “freshening” of their once mighty Dodge Caravan / Chrysler Town and Country models at the Detroit auto show in January. The re-styled ’08 minivans are critical to Chrysler’s profits. Will they restore their fruitful dominance or produce a mere blip on a sales chart with a decidedly downwards trajectory?
Although there's considerable debate on this point, Chrysler is generally credited with inventing the modern minivan. The minivan certainly reinvented Chrysler. After flirting with oblivion, the original Caravan and Voyager pumped billions into Chrysler's coffers in the mid ‘80’s through the '90’s. The minivan was such a successful suburban schlepper that it created its own demographic: the soccer Mom. The product’s popularity peaked at 1.6m units in 2000, when Chrysler owned some 45% of the market.
At last count, U.S. minivans sales have fallen below the one million mark. Sales of the once mighty Dodge/Chrysler twins have tumbled from a height of 650k annual units, to today’s estimated 400k units. Even worse, DCX’ door sliders are struggling to keep their slice of the diminishing pie. The models’ combined market share has fallen below 39%. Given the number of DCX minivans’ that find their way into rental fleets, their retail market share is probably closer to 35%.
Obviously enough, DCX’ minivan-related profits have taken a major hit. The company hasn’t been able to fully utilize both its Windsor, Ontario and St. Louis, Missouri minivan plants for quite some time. Even so, there's a minivan glut on dealers' lots and empty spaces (bank on it). The discrepency between ongoing supply and falling demand has meant massive incentives at the sharp end; trimming yet more profit from the products’ increasingly thin margins. Rather than fight for a slice of the diminishing pie, Ford and GM have in-sinkerated the minivan entries and cooked-up new entries for the so-called crossover market.
Most analysts are pessimistic about the minivan’s future. Many claim baby boomers are all boomed-out; they’re now looking for comfort rather than space. Meanwhile, soft roaders and crossover utility vehicles (CUVs)– some of which now come with third row seating– are encroaching deep into minivanland. Others aren’t so gloomy. They maintain that the genre’s family-friendly combination of safety, practicality and frugality is fundamentally sound. They say the right minivan could shake-off the Mom-mobile image and reinvigorate the entire niche.
Chrysler’s minivan situation is deeply reminiscent of the Ford Taurus, which fell from the top of U.S. passenger car sales when long product cycles, poor reliability, ageing technology and boring styling allowed the Toyota Camry and Honda Accord to dominated passenger car sales. Although Chrysler’s minivans ruled the domestic market for years, that dominance didn’t include a bullet-proof rep. Their minivans have a dubious mechanical legacy, including a self-destructing Ultradrive transmission and disastrous early ABS. With Mercedes behind them– at least in theory– Chrysler may have a fighting chance. If Chrysler builds a minivan that's only slightly better than their last effort, if they don't leapfrog the competition, they're screwed.
Chrysler’s new minivan must face down the Honda and Toyota, both of which produced minivans that came from nowhere to slowly and inexorably carve out about 34% of the market. At the same time, Chrysler’s '08 faces new competition from the Kia Sedona, and its Hyundai twin the Entourage. Both models are scooping up budget-minded buyers left high and dry by Ford and GM’s withdrawal from the market.
Spy pics of the DCX new minivan show another big, bland, boring box. The rumor mill suggests that Chrysler’s new minivans will be blessed with styling influences from the 300C. If so, it’s a calculated risk. As GM found out the hard way with its “dust-buster” Lumina MPV, minivan buyers generally favor conservative styling. They tend to look for practical qualities like reliability, build and interior quality, reputation, resale value, etc. Stow and Go or no, these are not qualities generally associated with today’s Chrysler/Dodge. Chrysler projects sales between 430k to 480k annually.
DCX will do well to maintain current minivan volumes. In fact, in category after category, Chrysler is looking ever more vulnerable. The Pacifica is toast, the 300C/Charger may have seen their best days, the Sebring will flop and the Challenger will share a pie with the Camaro and Mustang. Chrysler’s drying minivan teat is genuine cause for concern. It’s time to face facts: thanks to the transplant's persistence, there are no more cash cows.
More by Paul Niedermeyer
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