Fast growth for a showroom ghost
Automotive News
May 2, 2016
By: Nick Bunkley
It's one of the fastest-growing, most lucrative vehicle segments -- yet you'll almost never see one prominently parked in a dealership's showroom.
U.S. sales of full-size vans are increasing eight times faster than the industry average so far in 2016. Combined with their compact siblings, com-mercial vans are on track to top half a million sales for the first time this year.
While the pace of overall industry gains is slowing, the improving economy means demand for work vans is actually heating up.
Newcomers to the market from Nissan and Ram are surging, while Ford, the dominant player by far, enjoyed its best March van sales since the Carter administration. Ford replaced its aging E-series van, also known as the Econoline, with the European-bred Transit in 2014, just as many businesses had recovered enough from the recession to start upgrading their van fleets.
"You won't see it on the cover of Motor Trend, but it's certainly a great addition for Ford, said Marc McEver, the owner of Olathe Ford outside Kansas City, Kan. About 20 percent of the dealership's sales are now Transits, which come from a plant 30 miles away.
"It's really light years different between the Econoline and the Transit," McEver said. "And profitability versus the Econoline is much better."
Commercial vans are a big reason fleet sales rose 14 percent in the first quarter. Many vans are sold in bulk to utility companies, cable providers and other big bus-inesses.
But every year, tens of thousands of vans are bought one or two at a time -- by plumbers, electricians, caterers and florists -- small businesses are helping boost retail sales as well.
Either way, commercial van sales are coveted by automakers and dealers because many businesses tend to purchase the same brand repeatedly. In addition, dealers with strong commercial sales often have busier service departments. Business owners put a lot of miles on their vans and are more careful than many consumers to ensure the vehicles don't break down unexpectedly and disrupt operations.
"Their shops are always full, whether it be day or night," said Jim Morrison, the head of Ram trucks, "because those people are smart enough to know they need to do the maintenance on the vehicles."
At Ram, which introduced the ProMaster in 2013 and the compact ProMaster City last year, van sales are up 46 percent. But Morrison said he thinks some Fiat Chrysler dealers are still overlooking a big profit generator by not focusing enough on those commercial vehicles amid the consumer frenzy for pickups, SUVs and cross-overs.
"So some of the biggest growth, in an industry that's up 3 [percent], some of the best money potential for our dealers, is sitting right in their lots," Morrison said in an interview in March. "Unfortunately, sometimes they put them in the corners and hide them away."
Euro van invasion
The addition of the Transit, ProMaster and Nissan NV has revolutionized the U.S. commercial van market since the last time many small businesses bought one.
"It was in serious need of a transformation," said Karl Brauer, senior director of insights for Kelley Blue Book. "They literally used to look and drive like a box of metal on a skateboard.
"They were all archaic and obsolete vehicles that just went on and on because there wasn't a better option. Finally, in a short span of time, a bunch of better options became available."
As a result, the segment's average transaction price jumped from the upper $20,000 range in 2010 through 2014 to $32,366 in 2015, according to KBB data. For 2016, prices have risen almost $600 more.
The rest at: http://www.autonews.com/article/20160502/RETAIL/305029958/fast-growth-for-a-showroom-ghost
Automotive News
May 2, 2016
By: Nick Bunkley
It's one of the fastest-growing, most lucrative vehicle segments -- yet you'll almost never see one prominently parked in a dealership's showroom.
U.S. sales of full-size vans are increasing eight times faster than the industry average so far in 2016. Combined with their compact siblings, com-mercial vans are on track to top half a million sales for the first time this year.
While the pace of overall industry gains is slowing, the improving economy means demand for work vans is actually heating up.
Newcomers to the market from Nissan and Ram are surging, while Ford, the dominant player by far, enjoyed its best March van sales since the Carter administration. Ford replaced its aging E-series van, also known as the Econoline, with the European-bred Transit in 2014, just as many businesses had recovered enough from the recession to start upgrading their van fleets.
"You won't see it on the cover of Motor Trend, but it's certainly a great addition for Ford, said Marc McEver, the owner of Olathe Ford outside Kansas City, Kan. About 20 percent of the dealership's sales are now Transits, which come from a plant 30 miles away.
"It's really light years different between the Econoline and the Transit," McEver said. "And profitability versus the Econoline is much better."
Commercial vans are a big reason fleet sales rose 14 percent in the first quarter. Many vans are sold in bulk to utility companies, cable providers and other big bus-inesses.
But every year, tens of thousands of vans are bought one or two at a time -- by plumbers, electricians, caterers and florists -- small businesses are helping boost retail sales as well.
Either way, commercial van sales are coveted by automakers and dealers because many businesses tend to purchase the same brand repeatedly. In addition, dealers with strong commercial sales often have busier service departments. Business owners put a lot of miles on their vans and are more careful than many consumers to ensure the vehicles don't break down unexpectedly and disrupt operations.
"Their shops are always full, whether it be day or night," said Jim Morrison, the head of Ram trucks, "because those people are smart enough to know they need to do the maintenance on the vehicles."
At Ram, which introduced the ProMaster in 2013 and the compact ProMaster City last year, van sales are up 46 percent. But Morrison said he thinks some Fiat Chrysler dealers are still overlooking a big profit generator by not focusing enough on those commercial vehicles amid the consumer frenzy for pickups, SUVs and cross-overs.
"So some of the biggest growth, in an industry that's up 3 [percent], some of the best money potential for our dealers, is sitting right in their lots," Morrison said in an interview in March. "Unfortunately, sometimes they put them in the corners and hide them away."
Euro van invasion
The addition of the Transit, ProMaster and Nissan NV has revolutionized the U.S. commercial van market since the last time many small businesses bought one.
"It was in serious need of a transformation," said Karl Brauer, senior director of insights for Kelley Blue Book. "They literally used to look and drive like a box of metal on a skateboard.
"They were all archaic and obsolete vehicles that just went on and on because there wasn't a better option. Finally, in a short span of time, a bunch of better options became available."
As a result, the segment's average transaction price jumped from the upper $20,000 range in 2010 through 2014 to $32,366 in 2015, according to KBB data. For 2016, prices have risen almost $600 more.
The rest at: http://www.autonews.com/article/20160502/RETAIL/305029958/fast-growth-for-a-showroom-ghost