Chrysler's Minivans Going Cheap

by Adrian Imonti

Published: July 14th, 2007

The Boston Globe says Chrysler’s 2008 minivans are set to arrive at dealer showrooms with more features– extra air bags, electronic stability control, seats that swivel six ways to Sunday– and sticker prices averaging $2k below ‘07 models. The official party line: the price reductions will improve residuals and lower incentives (current average: $4,400 per vehicle). Yes BUT—Chrysler’s current family taxis are already sold at bargain prices. Base vs. base, the Caravan’s less expensive than a Toyota Sienna (-$4,400), Honda Odyssey (-$5,900) and Hyundai Entourage (-$4100). How can everyone else sell their minivans for thousands more than the company that invented it? The answer has very little to do with the price, indicating that Chrysler's financial salvation does not lie in offering bigger discounts– or more spin.

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MLS on Jul 14, 2007
You don’t have to wait for True Delta. If you go onto Dodge’s, Toyota’s, Honda’s and Hyundai’s websites for these models, they all clearly display their base MSRP’s. The issue isn’t whether the Dodge/Chrysler twins are the apples-to-apples to Honda et. al. There’s no argument there at all, as they aren’t even close. Wrong again. The Dodge minivans are offered in two different wheelbases: Caravan and Grand Caravan. The short-wheelbase Caravan starts at $19,770. The long-wheelbase Grand Caravan—the model that most directly competes with the base Odyssey, Sienna, and Entourage in terms of both size and standard equipment—starts at $24,420. Granted, this MSRP is $1,225 less than Honda's, but is also $265 more than Toyota's and $525 more than Hyundai's. The entry-level, long-wheelbase Chrysler Town & Country starts at $26,805—a full $2,385 more than its Dodge counterpart, and considerably more than the three other aforementioned vans. So, SherbornSean was right: the Chrysler vans, before discounts, are not so under-priced versus their competitors. Your comparison was indeed apples-to-oranges. That being said, Chrysler's current incentives are certainly too high; indeed, they damage both resale value and brand equity. Hopefully the 2008 vans' increased equipment levels and reduced MSRPs will help to end dependence on unsustainable incentives.

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Adrian Imonti on Jul 14, 2007

MLS, that would be like claiming that the Accord isn't beating the pants off of the Impala because the Accord is too small to be compared to it. (For what it's worth, an Impala is about 9 inches longer than the Accord.) The issue isn't the length of the minivan, it's the fact that the company that invented the product now has to toss around gargantuan incentives in order to sell them. Long van or short van, they still have to pay big incentives to sell both. The minivan helped to save Chrysler in one of its many near-death experiences. Since then, the company has clearly handed all of the brand equity that they built to the new brand leaders Toyota and Honda. If the product is that terrific, then it shouldn't need price slashing to sell it. If the only thing that Chrysler has to offer the market is a low price, then it's in the same boat as it has been before. Why bother with a new product launch when you've decided that it can't compete on its merits before you've even started?

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MLS on Jul 14, 2007
The issue isn’t the length of the minivan, it’s the fact that the company that invented the product now has to toss around gargantuan incentives in order to sell them. Long van or short van, they still have to pay big incentives to sell both. As stated in my last post, I agree that Chrysler is too dependent on incentives. I took issue only with your claim that the vans’ base MSRPs were $4-5k less than the competition’s. If you compare similarly equipped models, the base MSRPs are actually quite similar. If the product is that terrific, then it shouldn’t need price slashing to sell it. If the only thing that Chrysler has to offer the market is a low price, then it’s in the same boat as it has been before. Why bother with a new product launch when you’ve decided that it can’t compete on its merits before you’ve even started? It’s unfortunate that Chrysler (and GM and Ford) focuses almost exclusively on price in its advertising. I would have preferred that the latest press release on the new vans highlight innovative features like Swivel ‘n Go rather than price cuts, but at least the company is making an effort to realign MSRPs with real-world transaction prices. No one has driven the new vans yet. If they turn out to be great vehicles, then Chrysler shouldn’t have to offer much in the way of incentives. Over time, they might even increase prices to match Honda and Toyota. For what its worth, the 2008 Grand Caravan (the short wheelbase has been discontinued) will start at $22,470, while the new Town & Country will sticker for $23,190. After current NY Metro area incentives, the base prices for the 2007 competition are as follows: Sedona (long wheelbase) $22,795; Sienna $22,655; Entourage $21,895; Quest $21,350. If, after the MSRP cuts, Chrysler can abandon its current rebate structure, I’d say their new vans will be priced right on par with the competition.

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Windswords on Jul 15, 2007

"If the product is that terrific, then it shouldn’t need price slashing to sell it. If the only thing that Chrysler has to offer the market is a low price, then it’s in the same boat as it has been before. Why bother with a new product launch when you’ve decided that it can’t compete on its merits before you’ve even started?" Yes, I agree. If the Toyota Tundra is such a great truck why it shouldn't need to compete on price. Oh wait... we're not talking about Toyota are we? Sorry I forgot, when Toyota does this, it's crafty marketing by those oh so clever Japanese. When Chrysler does it, it's a sign of desperation from those clueless Americans. Sorry about the comparison with Toyota, what got into me?

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