Automakers Re-Invent the Minivan

Sluggish sales have prompted some automakers to go back to the drawing board in hopes of revitalizing the once-lucrative minivan market. Some industry experts wonder, however, if their new designs will appeal to U.S. consumers.

Back in 1983, Chrysler revolutionized the auto industry by offering features like sliding side doors and seating for seven. Chrysler continued to dominate the field although other automakers entered the fray. Even automakers traditionally known for compact cars launched their own minivan lines.

Until recently, Honda’s Odyssey has sold well as did Toyota’s Sienna and Kia’s Sedona minivan. The trend in recent years has been toward bigger, more feature-rich minivans. The current Dodge Grand Caravan is over two feet longer than Chrysler’s original Caravan model and sticker prices have risen dramatically.

In 2000 minivan sales in the U.S peaked at 1.37 million units sold. Last year that number had dwindled to a mere 614,021.

The recent economic turmoil combined with volatile gas prices and tougher fuel economy and emissions regulations are causing consumers and automakers to look for alternatives.

Ford Motor Company is among the many automakers looking to offer “compact minivans”, also referred to as “multiactivity vehicles” that still retain many of the features previously found in minivans while providing higher fuel efficiency and lower sticker prices.

Ford’s group vice president of global marketing, Jim Farley, says, “Minivans have become very expensive, very fuel-inefficient.” He also recognizes the need to offer more competitively priced alternatives to the minivan. He says “A nicely equipped minivan is now easily close to $30,000 or more.”

Ford’s C-Max, which debuted at the Frankfurt Auto Show last month, offers seating for seven but is only slightly larger than the current Ford Focus. Farley expects the C-Max to sell for around $20,000 when it hits U.S. dealer showrooms in 2011.

Also scheduled to launch in 2011 is the Chevy Orlando which is similar in size and features to the C-Max. Most auto industry analysts look for Honda and Toyota to introduce similar models, now being marketed overseas, to the U.S. market over the next couple of years. GM is reportedly working on a design that is said to be similar to the Ford C-Max, but the automaker has not indicated whether or not it is intended for the U.S. market or for export.

Mazda and Kia currently sell minivan alternatives in the U.S., but combined U.S. sales of the Mazda5 and Kia Rondo barely exceeded 50,000 units in 2008. Some automotive research firms see opportunity for growth in the sector. HIS Global Insight predicts that number to top 200,000 within the next two years as more models from other automakers become available. AutoPacific expects growth in the sector to exceed that estimate by approximately 250,000 units. Both firms place annual sales to reach about 300,000 units by 2014.

In the U.S., the compact minivan field is limited to two vehicles: The Mazda5 and Kia Rondo. Combined sales last year barely topped 50,000 units. But IHS Global Insight expects additional players to add 155,000 sales annually in two years, and AutoPacific predicts 171,000 more sales. Both research firms say annual sales will hit nearly 300,000 in 2014.

These new vehicles are an outgrowth of what is being referred to within the auto industry as the “C-segment” where the “C” stands for compact. One benefit for automakers is the ability to use existing platforms across multiple segments. Ford’s C-Max, for example, is built on the same platform as the next-generation Focus. Chevrolet is multi-purposing its Cruze platform for use in the new Orlando model.

Both the C-Max and Orlando were developed in Europe but will be built in the U.S. Chevy is retooling its Lordstown, Ohio operations to build the Orlando and Ford plans to build the C-Max at either its Louisville, Kentucky or Wayne, Michigan facilities.

Although no official announcements have been made by either company, many auto analysts see Honda’s Stream and Toyota’s Wish as obvious contenders in the U.S. market. Both models offer third-row seating and are already being sold in Japan.

HIS Global Insight market analyst Tracy Handler says sales of the new compact minivans will primarily be to former owners of regular minivans who want similar functionality in a smaller package.

AutoPacific senior manager of product analysis Stephanie Brinley warns, however, that the much smaller third-row seats offered in compact minivans could be a disappointment to consumers who compare them to those available in regular minivans. She says, “I think buyers are less enamored of a third-row they can’t use. The seats are essentially for small children.”

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