Automotive News: Fleets prop up minivan sales

[mkaresh]

This week's Automotive News reports that domestic minivan sales are even worse than they appear. While virtually no Honda Odysseys are sold to fleets, the percentages for Ford, Chevrolet, and Chrysler/Dodge are 65, 62, and 42, respectively. This explains why Ford and GM are getting out of the minivan business -- they have hardly any retail customers for their minivans.

Link (subscription required):

http://www.autonews.com/apps/pbcs.dl...=emailweekly01

[Ed753]

Fleets prop up minivan sales
Detroit 3 retail numbers crumble as segment shrinks

Rick Kranz | | Automotive News / January 1, 2007 - 1:00 am


DETROIT -- Simply put, Detroit 3 minivan sales are even worse than you thought.

The Detroit 3 are relying on fleet customers -- both corporate customers and daily rental companies, such as Hertz -- to prevent a minivan sales debacle.

In the first 10 months of 2006, fleet sales accounted for about 65 percent of Ford Freestar sales, about 62 percent of Chevrolet Uplander sales and about 42 percent of Dodge Caravan and Grand Caravan sales.

By comparison, fleets accounted for 1 percent of Honda Odyssey sales in the same period. Overall, fleets accounted for about 27 percent of all minivan sales.

The estimates were generated by the Automotive News Data Center, which compared its own overall sales data to retail vehicle registrations provided by R.L. Polk. Fleet sales involve the purchase of 10 or more vehicles.

The data explain why Ford Motor Co. and General Motors are bailing out of traditional minivans. The Chrysler group, on the other hand, is defending its turf. The company has restyled and re-engineered the 2008 Dodge Caravan and Grand Caravan and Chrysler Town & County, which will debut at the Detroit auto show next week.

Meanwhile, the import brands generally have avoided a meltdown. Retail sales of the Odyssey and Toyota Sienna remain steady, although the Nissan Quest continues to struggle.

Among the imports, only the Mazda5 and Kia Sedona generate significant fleet sales. Through October, fleet customers purchased 28 percent of all Mazda5s and 17 percent of all Sedonas.

---------------------------------
Slump
Consumers are bailing out of minivans. Here are annual retail registrations.
2001: 969,342
2002: 906,036
2003: 807,059
2004: 836,868
2005: 818,823
2006: 611,191*
* First 10 months
Source: R.L. Polk

---------------------------------

OK isn't good enough

The minivan segment is getting tougher because many retail customers are switching to crossovers to haul families and their gear. Through October, retail buyers purchased 621,594 minivans, down 12.7 percent compared with the year-ago period.

As retail demand declines, overall minivan sales could fail to top 1 million units in 2006, their worst result in 13 years.

"We are basically looking at roughly 700,000 in retail registrations this year," says Ford sales analyst George Pipas. "As the sales volume trails off, the first thing that happens is that the domestics turn to the daily rental business."

The Ford Freestar and Aerostar were "OK" vehicles, Pipas says, despite a significant Freestar re-engineering for the 2004 model year.

GM did not invest heavily to upgrade its minivans, and sales suffered.

"You just can't be OK when you are competing against Honda and Toyota," Pipas says. "The segment is getting too small to try to be an Odyssey wannabe. It will take you years to get a reputation to get up to that level. That accounted for our kind of just taking a whole different tack on this people-mover category."

Chrysler thinks the sales slide is temporary. Ann Fandozzi, director of global product markets for the Chrysler group, blames the tightening economy and the spike in gasoline price in 2006 for the minivan sales slide.

Chrysler sees overall minivan sales increasing "and stabilizing at about the 1.2 million-unit mark," she said at a press event in December.

No mommymobiles

The Detroit 3 are at an interesting crossroads for the segment.

Chrysler invested heavily in the 2008 Dodge Caravan and Grand Caravan and Chrysler Town & Country, with a conventional exterior and an innovative interior.

But sources say General Motors will phase out its traditional minivans -- the Chevrolet Uplander, Buick Terraza and Saturn Relay -- by 2010 and replace them with mid-sized crossovers. The first of these crossovers are the 2007 Saturn Outlook and GMC Acadia.

Meanwhile, Ford is producing an eight-passenger crossover for the 2009 model year. The vehicle, inspired by a recent concept called the Fairlane, will try to provide the minivan's family-hauling functions in a more stylish package. It lacks, for instance, the traditional minivan's sliding doors.

The Fairlane-inspired vehicle will be pitched to post-baby boom adults, generations X and Y, who likely spent a good portion of their childhoods scooting around in minivans and now don't want a mommymobile.

These younger adults simply aren't buying traditional minivans, says Jim Hall, vice president of AutoPacific, a consulting firm in Southfield, Mich.

He adds: "The minivan market is collapsing."

You may e-mail Rick Kranz at rkranz@crain.com

[CobaltSScrazy]

good, i hate minivans as it is. (yes i know i'm not the target demographic being a 20 yr old single male who is craving a Cobalt SS right now) but its true. Many Gen Y'ers don't want a minivan just as much as boomers don't want a station wagon. I like the Bu Maxx and will highly consider an Astra if its highly styled especially interior-wise relative to the 07/08 Balt and has good power...a RL would seal the deal no problem, but we will see. Chicago AS!!!

Good riddens and hopefully a Lambda x-over can explode and be the 'new minivan' for the new millenium and 07 and beyond...only time will tell though. thanks for posting the additional info.

CobaltSScrazy

[Buick61]

Why don't they say the Sienna's numbers? (If they did, sorry)

Anyone who's been to NYC knows how many thousands of them are on the streets as Taxis.

[tgagneguam]

Through October, retail buyers purchased 621,594 minivans, down 12.7 percent compared with the year-ago period...

Funny that GM doesn't think it deserves a fair share of this still sizeable market on its home turf. I interpret this and other data not as a justification for GM's cut-and-run strategy but more as a indication to stand and fight. After all, Honda apparently only moves about 1 percent of its roughly 150,000 units per annum to fleet. That tells me it's possible for GM to achieve at least the same as the younger, smaller HMC, especially if GM had developed Lambda to be flexible enough to accommodate crossovers and one mainstream minivan. Come on, GM, you're better than this.

Of course, the naysayers here will carry on about cutting losses, but in another thread, many of these same people will also claim that Cadillac needs to spend the money on marketing a very limited niche product like the "ULS." Interesting.

[jbartley]

the sooner GM is done with this segment the better. $$ and time better spent elsewhere.

[JM9777]

If only the Chevrolet Lambda would be a minivan instead of a rebadged Outlook. It wouldn't take much more effort on GM's part to stay in this segment. It doesn't even matter if they're #1 in sales, just keep a presence in the market.

[PocoToro]

Originally Posted by Buick61

Why don't they say the Sienna's numbers? (If they did, sorry)

Anyone who's been to NYC knows how many thousands of them are on the streets as Taxis.

These would be considered fleet sales anyway so it just proves the point. If real customers wont buy them find some one that will

[Buick61]

Originally Posted by PocoToro

These would be considered fleet sales anyway so it just proves the point. If real customers wont buy them find some one that will

Right. I understood the point, I was just wondering why they didn't breakout the Sienna's fleet sales numbers. They HAVE to be higher than those of Honda.

[TaHoE]

Originally Posted by Buick61

Why don't they say the Sienna's numbers? (If they did, sorry)

Anyone who's been to NYC knows how many thousands of them are on the streets as Taxis.

I hear that. There is a Toyota dealer near me and they haven't moved barely any of their Sienna inventory in the past year or so.

[Smaart Aas Saabr]

Why do they need to cut off production since no consumers buy... Fleet sales are sales...

[zaxxis]

Meanwhile, Ford is producing an eight-passenger crossover for the 2009 model year. The vehicle, inspired by a recent concept called the Fairlane, will try to provide the minivan's family-hauling functions in a more stylish package. It lacks, for instance, the traditional minivan's sliding doors.

I cannot believe Ford is doing this. Anyone who has shuttled around multiple kids will be the first to tell you that sliding doors on mini-vans are one of their key attributes!

Personally I find it sad that Ford and GM are giving up and basically admitting they cannot compete with Honda, Toyota and Chrysler. While minivan sales might be in decline, there is still a good market it for it. In a few years, Ford and GM will be in the exact same position that they are currently in with small cars. They minivan market will heat up and neither will even have a product to complete with.

-Z

[Caleb02]

and this is news to anyone?

[t-rex]

Holy shnikeys! I had no idea that many minivans went to fleets. I finally saw a Mazda5 on the road last week — with a commercial licence plate and "e" sticker in the back window. I think it's a cool little wagon but I don't see it being a big seller.

I also wondered if the reason for the minivan's sharp decline this year was the same reason that midsize SUV sales fell so quickly. Last summer's high fuel prices hit us all hard, but it's families with kids that tend to be the most budget-conscious, and the first to cut big spending. Since this demographic was the minivan's and midsize SUV's bread & butter customer base, this may explain why those two segments dropped off so sharply while fullsize SUV and truck sales only softened slightly. It would be difficult to attribute this year's sharp decline of minivans and midsize SUV's to the crossovers, mainly because there aren't that many crossvers on the market to steal such a large number of sales from. It's just a theory....

While I know it's not inexpensive to develop a new product, I'd reckon the bulk of development cost is in the platform. GM already have the excellent Lambda to build from. If the same effort put into the Enclave and Outlook were funneled into a minivan design, the result would be at the worst competitive, and at best class-leading. Perhaps a successful minivan would help offset Lambda's development costs.

What sickens me the most though is GM's acquiescence. Even if minivan sales level off at 600k per year, GM are suggesting that they don't have the capability to produce a minivan to knock the competition out. This lack of confidence doesn't bode well. Especially in a segment of the market that is so quintessentially American. Imagine Ford cancelling the Mustang, and GM dropping the Zeta Camaro, only to have Toyota and Mazda "ponycars" on the market. It just ain't right.

♫Baseball... Hot Dogs... Apple Pie.... and Geely Cars ♫

[boblutzfan]

Ok...so 42% of Dodge Caravans went fleet - but how many Town & Country minivan went fleet?