Almost 30 years after the minivan was introduced, after attacks from all sides, Chrysler Group LLC remains on top. Now, CEO Sergio Marchionne will have to decide how best to sustain the success.
So far, the moves made by Marchionne, who is preparing to merge Chrysler with majority owner Fiat SpA of Italy, have paid off. The choice he faces now: whether to merge Chrysler’s two remaining minivans into one and whether to dramatically redesign one or both. Either way, Marchionne and his dealers are committed to Chrysler’s signature product.
“I don’t care if the minivan market shrinks as long as I’m King Kong in it,” Chuck Eddy, a Chrysler dealer in Austintown, said in a phone interview. “That is Chrysler’s attitude, too. The minivan is here and the minivan won’t ever go away.”
Four years after Chrysler got a 1979 government bailout, Chief Executive Officer Lee Iacocca introduced the Dodge Caravan, and minivans soon became one of the company’s most important product lines. To some extent, Chrysler created the minivan and the minivan saved the company.
Three decades later, Chrysler maintains its sales lead in minivans. It’s one of the longest runs atop a vehicle segment in the U.S., along with the 35-year pickup reign of Ford’s F-Series line. The long-lasting supremacy, along the lines of Coca-Cola and Kleenex, has made the minivan a symbol of the company.
“When people think Chrysler, is minivan a product that comes to mind? The answer is ‘absolutely,’ ” said Alexander Edwards, president of the automotive practice at San Diego-based Strategic Vision, a marketing and branding company. “Most everybody that is in the minivan segment recognizes Chrysler as the creator.”
Chrysler has kept the title despite an onslaught of entries from Ford, Toyota, Honda and General Motors. Ford and GM eventually quit the segment, and Chrysler has claimed at least 40 percent of the U.S. minivan market every year since 2007.
Marchionne is closing in on deciding whether Chrysler still needs two entries for the U.S. minivan market. He led a complete overhaul of Chrysler’s lineup in the 19 months after its U.S.-backed bankruptcy in 2009, introducing 16 new or refreshed models. The Jeep Grand Cherokee and Chrysler 300 sedan have drawn praise from critics, including Consumer Reports.
The revamp has led to 11 months of U.S. sales gains exceeding 20 percent and made Chrysler the biggest gainer of market share through April. Deliveries climbed 33 percent in the first four months, boosting market share by 2 percentage points to 11.6 percent.
Chrysler’s first-quarter profit quadrupled from a year earlier to $473 million, the company said April 26. It was the company’s most profitable period since 1998’s third quarter. Marchionne reiterated Chrysler’s forecast that full-year net income will grow eightfold to about $1.5 billion, from $183 million in 2011.
With its minivans, the company is “studying all options,” including eliminating one of its models and then broadening the target market for the other one, said Saad Chehab, president of the Chrysler brand. Right now, the company aims to sell the Dodge Grand Caravan for less than $30,000 and its Chrysler Town & Country for more than $30,000.
Buyers paid an average price of $32,735 for the Town & Country in March, less than the $33,032 paid for Toyota’s Sienna and $32,949 for Honda’s Odyssey, according to data from auto website Edmunds.com. Grand Caravans sold for $27,151 on average.
Chrysler offers more-generous incentives on minivans than its competitors. The average incentive per Town & Country sold was $3,106 in March and $2,236 for Grand Caravan, compared to Sienna’s $1,650 and Odyssey’s $974, according to Edmunds.
Those four models have accounted for 90 percent of minivan sales so far this year in the U.S., where, over the past decade, many buyers have switched to car-based SUVs.