Chrysler Group will reduce the sticker prices on its new 2008 Dodge and Chrysler minivans by an average of $2,000 while adding features at the same time, the company said Thursday.
But two industry analysts said that since the current minivans have huge incentives on them, the 2008 pricing just brings the asking price closer to the actual prices consumers are paying now.
The size of the price reduction will vary with options and models when the new vans arrive in dealerships sometime this fall, Chrysler said.
For example, the base model Dodge Grand Caravan SE will be priced at $22,470, $1,950 below the current sticker price of $24,420, the company said in a statement. A Chrysler Town and Country LX would drop $3,585, from $26,775 to $23,190, the company said. The high-end Town and Country Limited would drop $935, from $37,335 to $36,400.
On both the Dodge and Chrysler minivans, the company added all-row side curtain air bags with rollover protection, electronic stability control with brake assist and traction control, as well as other standard features.
Chrysler was able to reduce the prices while adding features largely because its factories have become more efficient and because it targeted options that are most important to consumers, said spokeswoman Beth Ann Bayus.
The company has become more efficient at installing safety systems in its new minivans, and its factory workers have agreed to a more efficient team concept of building the vehicles, said Michele Tinson, another Chrysler spokeswoman.
Also, Jesse Toprak, senior analyst for the Edmunds.com automotive Web site, said the cost of air bags and other features is dropping every year.
He said the price reductions merely bring the minivan closer to what the actual sales prices are on the 2007 models.
On the current Grand Caravan, for instance, Dodge is offering an average of $4,400 worth of incentives, or around 25 percent off the sticker price, Toprak said.
The strategy is good, though, because both General Motors Corp. and Ford Motor Co. have pulled out of the minivan market, and Chrysler sees 2008 as a year to grab more sales, Toprak said.
Chrysler's major minivan competitors, the Toyota Sienna and Honda Odyssey, are not new models, and Chrysler could take sales away from them with its redesigned minivans, he said.
"They want those vehicles to appear very competitive in the marketplace," Toprak said. "They want to keep this relatively profitable segment in their hand. In the absence of Ford and GM, they see an opportunity."
Chrysler also doesn't want people replacing older minivans to get hit with sticker shock when they shop for new ones, said Aaron Bragman, a research analyst for Global Insight, an economic research and consulting company.
The company has become more efficient with its manufacturing, but may be taking a hit on the pricing in order to sell more vehicles, said Bragman.
Toprak said 80 percent of auto shoppers compare vehicles online, so buyers would be more likely to consider Chrysler with Honda and Toyota if its vans have lower sticker prices.
The lowest-price 2007 Toyota Sienna stickers at $24,155, while the cheapest Odyssey this year has a suggested retail price of $25,645, according to the companies' Web sites.
The price-cutting strategy is similar to what GM did last year in trying to keep the actual price closer to the sticker and relying less on incentives to lure buyers, Bragman said.
Chrysler, which invented the minivan, sold more than 370,000 of them last year.
It plans to introduce as an option in 2008 its "Swivel n' Go" system in which the second-row seats swivel 180 degrees to face the third row. A table can be installed between the seats so families can play cards, eat or do other activities while the van is moving.
Ford and GM expect the minivan market to decline and have replaced their products with car-based crossover vehicles that carry a similar number of passengers. Chrysler disagrees.