Competition Gears Up to Take On Chrysler's Huge Minivan Market
FOR American motorists, minivans have become the '90s alternative to the old-fashioned station wagon.
For Chrysler Corporation, they have become the foundation of a highly profitable empire. But there is a new kid on the block. So this spring, Chrysler and the Ford Motor Company are likely to square off in a war of the minivans.
Remember the Volkswagen microbus from the '60s and '70s? As the first minivan, the microbus was popular primarily among the counter-culture. It took the introduction of a new generation of minivans in 1984 for the concept to win widespread acceptance.
Chrysler's original Voyager and Caravan models, which made their debut that year, seemed to do everything right. They were roomy, yet small enough to fit in a garage. Later versions got longer and added more powerful engines and a variety of safety features. Chrysler even developed an integrated child safety seat. Built into the center bench, the seat could be quickly folded up to make room for more adults.
Chrysler has been able to maintain roughly a 50 percent share of the United States minivan market - which surged to more than 1.1 million units in 1993. According to auto analyst John Casesa of Wertheim Schroder in New York, the typical Chrysler minivan carries a profit margin of around $6,000. That helped Chrysler stave off bankruptcy between 1989 and 1992.
It is not that other manufacturers have not tried to chip away at the Chrysler monolith. Virtually every major carmaker has offered at least one minivan model.
The highly stylized design of General Motors' plastic-bodied APVs, including the Pontiac TransSport, won raves as a concept vehicle. But in production it has fallen far short of GM's expectations. The long, streamlined nose limits usable interior space, one of the prime reasons why people buy a minivan.
Toyota's Previa was flawed by an engine mounted between the front seats that makes it hard for passengers to climb into the back.
Ford's first entry in the minivan market, Aerostar, was rear-wheel drive and handled much like a conventional, full-size van. Its second minivan, the Villager, left out the airbags family buyers insist on. Minivan owners ``want something that drives like a car and has all the safety features of a car,'' says David Ford, program director for Ford's new Windstar minivan.
The Windstar, which debuts this spring, will not repeat those mistakes. It is equipped with standard dual airbags and optional child safety seats. The Windstar is roomy and has front-wheel drive. For a more car-like ride, Ford engineers borrowed the chassis used in the popular Taurus sedan. ``Windstar is the first credible threat to the Chrysler minivan,'' Mr. Casesa says. ``It will be the first minivan to combine Chrysler proportions with an attractive price.''
Chrysler's response to the Windstar is aggressive. ``It's our intention to remain the minivan leaders,'' says Steve Torok, chief marketing strategist for Chrysler minivans. ``We expect to be fully competitive with Windstar when it comes out.''
Chrysler recently added a third shift at its minivan plant in Windsor, Ontario. Most of the added volume will consist of low-priced models designed to steer potential buyers away from Ford. Chrysler hopes this will serve as a holding action until January 1995, when the company introduces the NS, a codename for the first completely redesigned version of the Chrysler minivan line since 1984.
Industry insiders who have seen NS say the new models will be big improvements and may include dual sliding doors to enable easier access to the rear seats.
An incentive battle between Ford and Chrysler is likely, industry analyst say. With the potential to build 240,000 Windstars a year, Ford will need to capture about a 20 percent share of the minivan market for its new entry to be successful.
That may not be so difficult. Ford will scrap production of its old Aerostar model. And the minivan market is robust enough to absorb the new competitor, predicts Chris Cedergren, a marketing specialist with the AutoPacific Group in Santa Ana, Calif. ``The market should grow so rapidly that Ford should have no problems reaching its objective,'' Mr. Cedergren says.
Other manufacturers are continuing to eye the lucrative minivan segment. Honda will have its own model ready for market within a year, company sources say. And by late 1996, General Motors will weigh back in with a replacement for the APVs.