Revving Up for a New Try : GM Redesigns Its Minivans--Just as Competition Is Getting Fiercer
There is no greater sin in the car business than being irrelevant. But you will get little argument from General Motors Corp. that when it comes to minivans, it has held that dubious position from the beginning.
The nation’s No. 1 auto maker last year sold just 91,000 Chevrolet, Pontiac and Oldsmobile APV minivans--vehicles whose sloping, needle-nosed front ends have earned them such derisive monikers as Dustbusters and anteaters.
Compare GM to industry leader Chrysler Corp., which sold five times as many. And whereas analysts say GM lost money on every minivan it sold last year, Chrysler reaped an estimated profit of $1.2 billion from the 496,000 cutting-edge kiddie haulers it sold--and it may top that this year.
Such numbers are not lost on GM as it belatedly introduces a new generation of minivans this fall. The three vehicles--Chevy Venture, Pontiac Trans Sport and Olds Silhouette--are just now arriving in dealerships (they went on sale last Friday in California), although they will be in short supply until early next year.
GM is not expected to knock Chrysler from its perch as minivan king, but observers say the auto maker has produced a solid vehicle likely to finally make it a player. If so, GM will again become relevant to the soccer moms of the world.
“It’s a very credible product that will eat into both Chrysler’s and Ford’s market share,” said Bill Seltenheim, vice president of Autodata, a Woodcliff Lake, N.J., market research firm.
GM’s dealers certainly hope so. They can’t wait to clean their lots of the old Dustbusters and put a real contender in their showrooms.
“The new minivan is head and tail above the old one,” said Rod Muller, owner of Muller Hood Pontiac in Riverside, who figures he will double or triple his minivan sales once he starts getting shipments.
“With some good marketing support, we will be a player. I wish I had 50 on the lot right now. I could sell them all.”
GM began building the minivans in September in Doraville, Ga. The launch is deliberately slow to avoid production or quality glitches. The plant has a capacity of 250,000 vehicles a year, and GM hopes to sell as many as 200,000 minivans in the U.S. in 1997.
Better late than never, perhaps, but GM is hardly catching the crest of the minivan boom. The market, now consisting of 17 models, is showing signs of leveling off even as the competition heats up.
The Japanese, until now just bit players, are preparing their first serious entries into the U.S. market. Next year, Toyota will begin making a new minivan--expected to be called the Laguna--based on its Camry sedan and built at its Georgetown, Ky., plants. Honda will follow in 1998 with a minivan based on the Accord sedan and made in Canada.
The minivan market has grown explosively since 1984, when Chrysler literally invented the boxy people hauler, in the process helping to save itself from oblivion. Today, nearly 1 of every 10 new vehicles sold is a minivan. Last year, Americans bought 1.25 million of them.
But some think the minivan has peaked as consumers are lured to sport-utility vehicles and full-size pickup trucks with extended cabs. Through September, minivan sales are actually down 2.4% over the same period in 1995, while sport-utility sales are up 20.4% and full-size pickups are up 14.2%.
One reason for the flagging ardor is that minivans, like the station wagons they displaced, are seen by many as life-stage vehicles--necessary evils for growing families that need to cart the Cub Scout troop to McDonald’s. Jeep-style vehicles, on the other hand, connote freedom and independence.
“There is a huge backlash against minivans,” said George Peterson, president of AutoPacific Group in Santa Ana. “They have a lot of utility and practicality. What they don’t have is image.”
Yet auto executives say their market research shows that the minivan market will continue to grow--albeit more slowly--to 1.5 million annual sales by early next century. It will be fed by the traditional family buyer as well as by retirees and empty nesters drawn to the car-like ride and handling and versatility that minivans offer.
“The minivan is no longer just a mommy-mobile,” said Fred Schaafsma, vehicle line executive for GM’s minivan. “We still see significant growth potential in minivans.”
Whatever the market outlook, there undoubtedly is room for GM to make inroads. GM now is a distant fourth in the front-wheel-drive minivan sector. Overall GM has about 16% of the market, compared with about 44% for Chrysler and about 29% for Ford Motor Co.
The minivan market is one GM failed to appreciate until it was too late. It decided in the early 1980s that the market had little potential. When Chrysler proved GM wrong, the company ignored its own consumer research and introduced a radically designed minivan in 1990 that quickly flopped.
The APVs--short for “all purpose vehicles”--featured plastic side panels that proved difficult and costly to manufacture. They were initially underpowered and had a tendency to rock and roll on the highway. But it was the space shuttle-like design that turned consumers off the most.
“They had avant-garde styling in a segment that demands mainstream styling,” said Chris Cedergren, an independent consultant based in Thousand Oaks.
This time, GM made a religion of listening to consumers. Its product development team interviewed more than 4,300 minivan owners--half of them Chrysler loyalists--to determine what buyers expect and want most in a minivan.
The result is a more conventionally styled vehicle loaded with amenities. For instance, GM’s minivans win the cup holder and storage-space bragging rights hands down--17 cup holders and up to 26 storage spaces.
Following in Chrysler’s path, GM is offering an optional sliding fourth door on the left passenger side--a highly popular feature that makes Ford, which doesn’t offer it, vulnerable to the new GM entries. And GM is offering a remote-controlled side-passenger door, the only manufacturer to do so.
“The biggest evidence that they listened to the customer is the fourth door,” said Nicholas Colas, analyst with CS First Boston.
GM is pricing its new minivans aggressively, although not as low as some analysts had expected. The vehicles retail for $20,495 to $26,805. There are no stripped-down models. GM says its minivans offer more features than rivals and yet are priced lower when compared on an option-for-option basis.
“When you look at the way people buy these vehicles, we are about $1,000 cheaper than the competition,” said Jay Flaherty, assistant brand manager for marketing for the Venture.
The Venture, the cheapest, is aimed at the market’s heart--entry-level and middle-income buyers. The Silhouette, with a more refined look and lavish interior, is directed at upscale, import buyers. The Trans Sport is targeted at image-conscious buyers interested in performance and sportiness.
Pontiac also offers a more rugged Trans Sport package called the Montana with a sport-utility look and bigger tires. The vehicle is being pitched as a hybrid that mixes elements of a minivan and a sport utility.
“One out of 10 minivan buyers also considers a sport utility,” said Jim Shoal, assistant brand manager of marketing for the Trans Sport. “We are trying to bridge the gap.”
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The Minivan Families
Minivan sales have plateaued in the last few years as the rest of the truck market grew vigorously. However, minivan sales are expected to reach 1.5 million units annually in the next five years.
MINIVANS SOLD
Millions of vehicles:
1996: 1.26*
SHARE OF AUTO SALES
Percentage of total auto sales:
1996: 8.2%*
* Projected
MINIVAN MARKET SHARE
Through September:
Chrysler: 44.2%
Ford: 28.7%
GM: 15.5%
Japanese: 11.6%
MINIVAN SALES BY MODEL
Top 10 minivan models for the first nine months of the year:
*--*
Model Units sold Market share Dodge Caravan 232,625 24.5% Ford Windstar 160,880 17.0 Plymouth Voyager 120,339 12.7 Chevrolet Astro 98,053 10.3 Chrysler Town and Country 65,987 7.0 Ford Aerostar 60,265 6.4 Mercury Villager 51,432 5.4 Nissan Quest 36,897 3.9 GMC Safari 29,736 3.1 Chevrolet Lumina APV 25,570 2.7
*--*
Sources: Autodata Corp., CS First Boston Equity Resources
