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Automotive News: Fast growth for a showroom ghost

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#1 ·
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
 
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#2 ·
The entire article is pretty interesting, not only the first part.

One of the interesting things I'm taking away from this is that the manufacturers can actually raise prices and charge more for these without hurting volume and still make a profit.
 
#16 · (Edited)
True

This is also true of Minivans where the market has changed quite a bit on the retail side and where ATP's are rising as Minivan buyers will pay up for the goodies.

Best part to me was the money dealers make on Service which for those who do not know a larger percentage of profit that new car sales for dealers so it is very important to them and why GM must make sure both Chevrolet and GMC stay in the Commercial Van business.
 
#3 ·
GM has really fallen behind in this segment. Ford's Transits are everywhere in my area and a friend even bought a striped (manual-trans) panel version just for shuttling his mountain bike and occasional commuting. It is actually a pretty cool little vehicle with a nice front cab environment, particularly considering its lowly status. When he was shopping around, I couldn't bring myself to recommend or even mention the City Express; it's sort of uncool looking. I really hope Chevy/GMC has something surprising in the works... electric or Voltec versions might propel them into relevancy.
 
#4 ·
The ONLY reason these vans are selling is big discounts and avalibility !

The old style GM full sizers are hard to find and no discounts!
The factory that builds them also builds the hot selling new gm midsize colorado/canyon
replacement pickups so the vans are not a build priority.

A local mb dealer is still trying to unload a bunch of 2014 mb vans at a steep yet
$pendy discount. Local sprinter dealer is having the same issue.
nissan vans are a last desperate choice for purchasers!
 
#5 ·
It still amazes me the ignorance of some posters....maybe they can't read or dare to try.....

"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."
 
#15 ·
Great point.

Illuminates the lack of global automotive savvy at GM.

Ford gets it via their recent "One Ford" strategy that forced them to make sure they covered all markets.

GM needs a "GM One" strategy that is based on GM's core global Buick/GMC/Holden/Opel/Vauxhall "Brand".

GM must come to grips with the fact that Buick is the face of GM in China, Opel in Europe and Chevrolet only in the U.S. where Buick and GMC can become major contributors thus making it imperative they are part of a comprehensive global Buick/GMC/Holden/Opel/Vauxhall "Brand"

GMC can sell Vans and should be GM's lone Minivan using the Savanna name on the next gen Enclave/Acadia XL/Traverse so that it can be sold globally, second choice would be Buick where it could offer a Minivan to compliment the Enclave and why I make it the second choice since I do not think U.S. Buick dealers would want the competition. GMC dealers can offer the Savanna Minivan for Commercial/Government Fleet and GM can make a tidy profit in rental fleet to build volume. Can see a Savanna Denali doing well actually as the Minivan has moved upmarket more than most think.

GM really needs to stop the JV approach it takes with the City Express with Nissan, Combo with FCA, Vivano/Movano with PSA (IIRC) or is it Renault/Nissan?

Ford makes a ton of money globally with the Transit Connect/Connect XL that gives Ford a quasi Minivan offering and competes with Promaster City, NV200 and City Express along with the Combo in Europe, AND Ford pockets all of the cash. Transit is the real money maker with good global sales and the fact Ford gets 100% of the cash (no sharing with JV partners).

GM can do the same with a Global Small - Medium Commercial van to replace the Combo/City Express and Medium to X-Large Commercial Van to replace the aging Express and JV European vans.

These vans would be sold as GMC vans where Buick, Opel and Vauxhall have a presence, eliminating the need for Buick to have Commercial operations and consolidating global design. Obviously these GMC vans would be shared with Chevrolet in N.A. and other markets where Chevrolet currently has Commercial operations.
 
#8 ·
HOLD UP ladies....................

I was commenting on ANOTHER poster lamenting the GM old school vans............

The reason the new style vans selling at nizzan and ford dealers is because of the
limited supply of old school gm vans.
So most have NO choice but to buy these new model vans.
 
#9 ·
Express Cargo has 94 days supply, so I wouldn't say the inventory is "tight". GM discontinued the 1/2 ton Express, basically replace that for Colorado, I'm sure GM makes a few more bucks on a Colorado than the stripper 1/2 ton work van, but in doing so, GM significantly shrunk the demand for it's already falling in demand product...........
 
#10 ·
I see those little Fords all over Toledo town.
 
#11 ·
I stopped at a used car lot yesterday to look at a diesel truck and they had 5 or so panel vans including a NEW transit and the time I was there the Transit had 3 different customers check it out
apparently some fleet bought 1 of each brand to try out for a year and sold all the vans after their test
 
#14 ·
No worries, mate! They're used to that bowling ball bouncing off their broken toes by now.

Does it still hurt?
 
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