Minivan market not what it used to be, but margins make up for it

[87accordlxi]

Filed under: Car Buying (http://www.autoblog.com/category/carbuying/), Minivan/Van (http://www.autoblog.com/minivans/), Chrysler (http://www.autoblog.com/chrysler/), Ford (http://www.autoblog.com/ford/), GM (http://www.autoblog.com/category/gm/), Honda (http://www.autoblog.com/honda/), Hyundai (http://www.autoblog.com/hyundai/), Kia (http://www.autoblog.com/kia/), Toyota (http://www.autoblog.com/toyota/), Earnings/Financials (http://www.autoblog.com/category/earnings-financials/)
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Residual values for last year's minivans are higher than they were in 2000.
Much like the station wagon was the shuttle of Baby Boomer generation, the minivan has been the primary means of transport for Generations X and Y. Just as the boomers abandoned the Country Squire, though, those kids that were toted around in Grand Caravans and Windstars are adults, and they certainly don't want to be seen in the cars their parents drove.

So why, then, are there still some brands holding out in the minivan market? Chrysler (http://www.autoblog.com/chrysler/) has already announced that a new Town & Country (http://www.autoblog.com/2014/05/06/chrysler-100-cuv-plug-in-hybrid-minivan/) will arrive in the next few years, the Kia Sedona (http://www.autoblog.com/kia/sedona/) has just been given a massive redesign (http://www.autoblog.com/2014/04/17/2015-kia-sedona-new-york-2014/) and both the Toyota Sienna (http://www.autoblog.com/toyota/sienna/) and Honda Odyssey (http://www.autoblog.com/honda/odyssey/) remain strong products despite being in the middle of crossover-heavy lineups.

The simple answer? It's all about the money.

"They're good moneymakers," George Girjel, owner of Toyota (http://www.autoblog.com/toyota/) of Cool Springs in Tennessee, told Automotive News (http://www.autonews.com/article/20140602/RETAIL01/306029976/minivan-meltdown-maximum-margins). "And the more loaded they are, the faster they sell. The Sienna Limited retails for about $49,000, and we can't keep any in stock. They come in and they're gone."

That sentiment was echoed on the domestic side of the dwindling minivan market. "It's a good transaction and a loyal customer," said Brian Heney, the operations director of a nine-dealership group in Colorado. "You start loading up a Town & Country (http://www.autoblog.com/chrysler/town+and+country/) and they sell for $45,000. We like selling them."

Weirdly, though, the moneymaking minivan only came about because of slow sales. "When there are eight or nine entries in the minivan segment, nobody makes any money," Hyundai (http://www.autoblog.com/hyundai/) CEO Dave Zuchowski said at an industry conference in April, according to AN. "When four people drop out because they can't afford to stay in and there are just four or five remaining players, they all make money."

It was the failure of the minivans of General Motors (http://www.autoblog.com/gm/), Ford (http://www.autoblog.com/ford/) and Hyundai that's allowed the offerings from Chrysler, Honda (http://www.autoblog.com/honda/) and Toyota (http://www.autoblog.com/toyota/) to become real moneymakers. According to ALG, residual values for last year's minivans are higher than in 2000, with 36-month values up to 48.9 percent from 47.2 percent, AN said.

While the minivan market continues to make money, the real question now is whether these strong residual values and high transaction prices will force automakers that previously abandoned the market, like Ford or GM, to give it another look. While that doesn't seem likely, considering the success of crossovers from General Motors and Ford, along with the new Transit Connect (http://www.autoblog.com/ford/transit+connect/), the appeal of money has a way of doing strange things to automakers.Minivan market not what it used to be, but margins make up for it (http://www.autoblog.com/2014/06/05/minivan-market-making-big-money/) originally appeared on Autoblog (http://www.autoblog.com) on Thu, 05 Jun 2014 08:34:00 EST. Please see our terms for use of feeds (http://www.3geez.com/rss-term-of-use/).
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[87accordlxi]

I've always found it interesting that Chrysler has been doing it right since the 80's and until recently the others haven't caught on to the formula. Big and versatile is what you need, and everything from GM, Ford, Honda, Toyota, Nissan and Kia started out overly compromised.

[Dr_Snooz]

From all that I've heard, Hyundai is laying the smack down in the auto market, similar to what Honda was doing in the '80s. The business models for Chrysler and the other Detroit makers have pretty much been: sell crap, get a bailout when the money runs out.

[87accordlxi]

Chrysler has tanked itself three times in my lifetime, but through it all they made sure to never screw up the minivan.

Hyundai and Kia are killing it now. They're the new Toyota and Honda all rolled into one company. Imagine when they roll out a true luxury brand - with the profits to be had there you know they'll do it. The Genesis and K900 are outstanding cars from everything that I've read.

[2oodoor]

The Ram mini van, Chrysler Town & Country as well, are awesome reasonably priced vans. With the 3.6 Pentestar v6 in the 300 hp neighborhood, they are fun as hell to drive. The Honda is outrageously high priced so Kia & Hyundai were smart o get in tbe game. They would be smart to use their van format to create a cargo van, that is a hot market. 4x4 with multi ratio transfer case would be nice to see too. People the survivalist marketing is still strong.

[87accordlxi]

If the light cargo van market is juicy enough for Ford to build Transits in Turkey, ship them to the US as passenger vehicles, strip the interiors out & throw them away, ship the gutted cars to dealers as commercial vehicles and still make money, then the Ram Van makes total sense. Granted that whole Ford thing was done to avoid tariffs, but still.

[conozo]

From all that I've heard, Hyundai is laying the smack down in the auto market, similar to what Honda was doing in the '80s. The business models for Chrysler and the other Detroit makers have pretty much been: sell crap, get a bailout when the money runs out.

Here in my town there are two unrelated Kia and Hyundai dealers and they are doing very well. They offer crazy incentives such as doubling the warranty to 20 years/200,000 miles all the time. They have had a couple buy one get one free in the past. If i had to get a new car i would seriously consider them with the 20 year warranty.

Do any of your dealers have crazy incentives like that?

[87accordlxi]

I've never seen a 20 year warranty, but I have seen a couple BOGO Kia Rio deals.

The Rio is actually a nice little car. Super comfortable seats.