Auto Industry

Popularity of SUVs has slowly put brakes on minivan sales


By GREG KEENAN
AUTO INDUSTRY REPORTER
Thursday, February 19, 2004 - Page B1

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Anna Kennedy could hardly have known it at the time, but when her family switched from a Toyota Sienna minivan to a Highlander sport utility vehicle, they were taking part in a slow but profound shift that is shaking up the auto industry.

It's the gradual but steady decline in the minivan -- one of the most popular and profitable vehicles since what was then Chrysler Corp. introduced it in the 1980s in a throw of the dice that helped the third-largest U.S. auto maker come back from the financial brink.

The minivan segment lost more buyers in the past four years in Canada than any other vehicle segment, research firm Maritz Canada Inc. says in a new study to be released today, with minivan owners switching mainly to SUVs and compact cars.

Customer loyalty to minivans tumbled to 48.1 per cent last year from 63.5 per cent in 2000, according to a survey of 25,000 Canadian buyers done by the automotive research firm.

"I think we've moved past the van stage . . . We're sort of in the transition stage, " said Ms. Kennedy, who added that she wanted something sportier than a van, but that rides just as high on the road.

She doesn't do as much car pooling as she once did, she said, so there's less need for the third row of seats in the minivan.

But the family's new Toyota Motor Corp. Highlander has a third-row of seats that folds up and down easily, and when the seats are down, there's plenty of room for the family dog. The minivan seats had to be taken out to create that kind of room in the back.

"It doesn't feel as big as a van," said Ms. Kennedy, vice-president of retail excellence at the Indigo Books & Music Inc. chain, two-time minivan purchaser and a Toronto mother of two girls.

She noted that she's not entirely thrilled with the soccer mom image projected by the minivan.

Her experience is fairly typical of minivan owners, the Maritz survey shows.

More than 15 per cent of what the company called "minivan defectors" bought compact SUVs last year, compared with 5.5 per cent in 2000. Loyalty to full-sized SUVs jumped to 38 per cent last year from 28 per cent in 2000.

This isn't to say that minivans will be off the road any time soon. They accounted for more than 1.2 million sales in Canada and the United States last month and the segment is among the most fiercely competitive with six auto makers assembling the people haulers in North America.

"Whether it's changing tastes or rising prices, the reasons so many customers walked away from the minivan have to be troubling to Canadian manufacturers because of the number of minivan production facilities across the country," said John Kalsbeek, director of the automotive group at Maritz Canada.

That fear may be overstated, however, because just two assembly plants in Canada are dedicated to minivans and subtle changes in the vehicles themselves and the approach to marketing minivans means they represent a smaller slice of Canadian vehicle production than they did in 2000.

The Chrysler division of DaimlerChrysler AG, for example, now makes a vehicle called the Pacifica in its massive Windsor Assembly Plant, where the auto maker first cranked out minivans in 1984 and where the plant has been run on three shifts a day -- often for six days a week -- for more than a decade.

Chrysler dubbed Pacifica a sports tourer, to distinguish it from the minivan stigma and discourage people from thinking it's a station wagon, which it most resembles.

General Motors Corp. is using the title compact sport vans for its next generation of minivans.

At first glance, the new Quest from Nissan Motor Co. Ltd. looks more like an SUV than a minivan.

Ford Motor Co. redesigned its Canadian-built minivans and renamed them for the 2004 model year and kept them more distinctly in the minivan family, but sales so far have fallen short of expectations, a development that may reflect the slowly waning popularity of the segment.

Auto makers are also rushing to offer more vehicles in the full-sized, luxury and compact segments of the SUV market in order to capture minivan defectors.

"The segment is not doomed," said Chris Travell, vice-president of the automotive group for Maritz Canada, who noted that the image the vehicles project, rather than demographics, appears to be behind the shift.

The new Chrysler minivan scheduled to be launched next month with second-row seats that fold down is expected to give that auto maker and the entire segment a bit of a boost, Mr. Travell said.

Chrysler group chief operating officer Wolfgang Bernhard said last week that the company has 40,000 advance orders for its new minivan.

It will be two years before a competitor matches the second-row fold-down seats, Mr. Bernhard said.

Minivans are still the fourth-largest segment in Canada, but overall sales dropped to 198,977 last year from 234,150 a year earlier. Last year's sales represented 12.5 per cent of the entire Canadian vehicle market, compared with 15.7 per cent in 2000.








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