IE 11 is not supported. For an optimal experience visit our site on another browser.

Stalled minivan sales spell trouble for Chrysler

Chrysler LLC says it's pleased with sales of its new minivans, but there are signs that the vehicles — crucial to Chrysler's success — aren't doing as well as the company had hoped.
2008 Dodge Grand Caravan
Chrysler's Dodge Grand Caravan is in danger of losing its spot as the top-selling minivan in the U.S. to the Honda Odyssey.Lenny Ignelzi / AP
/ Source: The Associated Press

Chrysler LLC says it's pleased with sales of its new minivans, but there are signs that the vehicles — which are crucial to Chrysler's success — aren't doing as well as the company had hoped.

The company plans to idle its Windsor, Ontario, minivan plant for two weeks in January in an attempt to reduce inventory, and it has put up to $1,500 worth of incentives on the minivans. The Dodge Grand Caravan also is in danger of losing its spot as the top-selling minivan in the U.S. to the Honda Odyssey, which was outselling Dodge by 3,300 vehicles through November.

"The vans are a little bit slow sales-wise and customers have been a little bit slow to come around to them," said Mark McCready, vice president of market planning and pricing for the automotive Web site.

It's not all bad news for Chrysler. Sales of the more luxurious Chrysler Town & Country were up 10 percent in November — the second full month of sales — compared to the year before, according to Autodata Corp. Dodge Grand Caravan sales fell 6 percent, a drop Chrysler blamed on the elimination of the shorter, lower-priced Dodge Caravan model. Still, that was a better performance than August, when sales of the aging Caravan and Grand Caravan were down 28 percent.

Chrysler remains the industry leader, with the Dodge Grand Caravan and Chrysler Town & Country together controlling nearly 40 percent of the minivan market.

There's also been some buzz about the features on the 2008 Dodge Grand Caravan and Chrysler Town & Country, particularly the second-row seats that swivel so the occupants can sit around a table.

"They have been very, very well received," said Steve Miller Sr., a Dodge dealer in Vestal, N.Y. Miller said he's picking up a lot of customers from General Motors Corp. and Ford Motor Co., which are getting out of the segment. But even Miller, who also sells Hondas, said he's selling Odysseys as quickly as he can get them on the lot, and he notes that most buyers of the Honda minivans aren't cross-shopping at Dodge.

Chrysler Chairman and CEO Bob Nardelli said Thursday that sales are meeting the company's targets and the plant shutdown has more to do with projections for a slow industry in 2008.

"I think it's more a function of looking at the industry and really making sure that we appropriately size ourselves," Nardelli said during a holiday party for media in Detroit. "We certainly don't want to get back to where we were, and having an overinflated inventory."

In 2006, Chrysler dealers revolted when the company produced too many vehicles and tried to push them off on dealers.

McCready said Chrysler's price-conscious target customers were among the most affected by higher fuel prices and the housing slump. Early on, McCready said, many customers complained that the vans were too expensive and had too many features. The Grand Caravan SE starts at $22,470, while the Chrysler Town & Country LX starts at $23,190. That compares with a starting price of $25,860 for the Odyssey and $23,895 for the Hyundai Entourage.

McCready said Chrysler's incentives have helped and consumers are growing more familiar with the options, which include satellite television and a back-up camera. Darryl Jackson, Chrysler's vice president of sales, said the company is pleased with customer response and doesn't think consumers are confused by the features.

"There's never too many presents for Christmas," he said.

Aaron Bragman, an auto analyst with the consulting firm Global Insight, added that despite the loss in sales, Chrysler's decision to kill the cheaper Dodge Caravan was a good one, since the company will eliminate manufacturing costs and make more profit per minivan. Jackson said earlier this month that Chrysler expects to win back some Caravan customers later this year with the new Dodge Journey crossover.

Jack Nerad, executive market analyst for Irvine, Calif.-based Kelley Blue Book, said response to the minivans has not matched the runaway success of other new products like the 2008 Honda Accord or the 2008 Chevrolet Malibu. Accord sales were up 25 percent in November, while dealers had only a seven-day supply of Malibus in November. Chrysler wouldn't give numbers on its minivan inventories.

Nerad said Chrysler, which became a private company in August and is undergoing a massive restructuring, may not have the cash to get its message out. Nerad estimated that GM's Malibu ad campaign costs well over $100 million.

"The general perception is, these days, that the Odyssey is probably a superior product and the Toyota Sienna is a good product," Nerad said. "Chrysler needed to throw that kind of marketing dollar at it to get people to consider it."

Competition is especially fierce because the segment is shrinking as more buyers move to options like crossovers. U.S. minivan sales were down 20 percent through November. Bragman said minivan sales are expected to continue to fall through 2012, when they might pick up again.