Why Chrysler Is Bullish On Minivan Market

Chrysler, which invented the minivan, remains bullish on the market for the vehicle, despite signs minivan sales won't rise dramatically anytime soon.

"The big picture is that minivans are a stable and big market," says Ann Fandozzi, Chrysler's group director for front-wheel-drive product marketing. She was a member of the team that redesigned the company's minivans for the 2008 model year. The vehicles were introduced at the North American International Auto Show in Detroit earlier this month.

Chrysler, the segment leader, expects sales of minivans to reach about 1.1 million units in 2007. Its two brands, Dodge Caravan and Chrysler Town & Country, represent about a third of the market. Its closest competitors are the Toyota Sienna and Honda Odyssey.

Minivan sales in 2006 slid almost 12% to 970,000 from 1.1 million in 2005, according to Autodata Corp. of Woodcliff Lake, N.J. Fandozzi says that minivan sales are more sensitive to downturns in the economy because the people who buy them are generally more budget-conscious.



Part of Chrysler's optimism, Fandozzi says, is that the members of Generation Y, children of the Baby Boomers, are creating families earlier than the previous Generation X did.

"They are more about family formation," she says. "The Millenials are starting to have kids at 19 and 20 years old." She added that "empty nesters" -- or people close to retirement or in retirement -- remain a big part of the minivan market as well.

Chrysler will begin marketing its newly designed minivans beginning in the late summer. While Fandozzi declined to give specifics on the marketing, the new minivans come with a new seating configuration called Swivel n' Go that is likely to feature prominently.

The second row of seats can be turned around to face the third row. The minivans also come with an optional table that can be anchored in the floor to create what Fandozzi calls the "living room effect."

"We know that the minivan starts from the inside out. We wanted to create a space where families can connect. Families are busier than ever before," she says. "Our formula starts with inside and then we think about what they should look like on the outside."

Other companies, such as Nissan, designed minivans that were more fashionable on the outside, listening to a group of customers who didn't like the dowdy image of the minivan.

The redesigned Nissan Quest was less than successful with core minivan consumers. Other automakers such as GM and Ford have moved away from the minivan market and are focusing on "crossover" versions of minivans that look more like a sport-utility vehicle.

But Fandozzi says Chrysler has found in its consumer studies that minivan owners don't cross-shop "crossovers." "They cross shop other minivans," she says. "It's a rational choice, you either need what a minivan offers or you don't." She says in general that these consumers need more space than cars or sport-utilities and they are looking for something that is more fuel-efficient.

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