Death of Minivan, and Chrysler?

[Saddle Bronc 124]

http://blogs.moneycentral.msn.com/topstock...d-chrysler.aspx

The death of the minivan (and Chrysler?)

Posted Jun 30 2008, 06:59 PM by Charley Blaine

Chrysler exists because Lee Iacocca bet the company on the minivan. Now, thanks to the oil crisis, the minivan looks like it could be on its last legs.

One of the company's two minivan assembly plants will be shut indefinitely on Oct. 31, Chrysler said today. The problem is that families -- the target market for minivans -- have been particularly affected by rising gas and food prices, falling home values and more difficulty in borrowing money.

It's a humiliating development for Chrysler, which spent $1.4 billion on the redesign of its two industry-leading minivans, the Chrysler Town & Country and Dodge Grand Caravan. And then saw sales go, well, nowhere.

"Everything that a family needs is more expensive right now, and so the last thing they're looking at is, 'Do they need to replace their Honda Odyssey?'" said Rebecca Lindland, an auto analyst for Global Insight, the economic consulting firm.

U.S. minivan sales peaked at 1.37 million in 2000, 17 years after Chrysler introduced them.

Note that Blaine parrots Iacocca's being "minivan inventor", which concept is actually erroneous: first vehicles which could be called minivans in US (and elsewhere) were introduced by....Volkswagen ("Type 2", the familiar precursor to the Vanagon) in 1950; even some of the design ideology was copied by Iacocca--the first Chrysler minivans were designed on a K-car frame, analogous to the first "Type 2" using a Bug frame.

They've been falling steadily since and are expected to fall below 650,000 this year for the first time since 1986. Sales of the Dodge Caravan were off 35% through May from a year ago and 13% for the Chrysler Town & Country, according to Autodata Corp., which tracks industry sales.

The minivan has been Chrysler's top product for years, and Chrysler has 30% of the minivan market. (The minivan came after Chrysler nearly collapsed in the 1970s and required a government debt guarantee to stay in business.)

But sales are off because SUVs have become far trendier. The much bigger problem: soaring gasoline prices that have made minivans even more vulnerable.

"The future of the segment is up in the air," Tom Libby, senior director of industry analysis for the Power Information Network, a division of J.D. Power and Associates, told The Associated Press recently.

But Chrysler created some of its own problems. Among the biggest issues: It discontinued its smaller-wheel model because it couldn't put in all the features that were in the redesigned models. That decision now haunts the company because buyers have been put off by the higher prices required to pay for the new minivans.

After stopping production at its minivan plant, in suburban St. Louis, Chrysler will still make minivans at a plant in Windsor, Ont., outside Detroit. It is also cutting a shift at a truck assembly plant in Fenton, Mo. In all, about 2,400 of 3,500 workers at the Fenton facilities will be affected.

Chrysler’s announcement comes at the end of a dismal quarter for the industry. Sales reports that the automakers will release Tuesday are expected to show that June was the worst month in at least 15 years, with sales down about 17% from a year ago, according to estimates by Edmunds.com.

Chrysler, which makes a higher proportion of trucks than the other major automakers, is believed to have fared the worst, but all three Detroit automakers are projected to report drops of at least 25%.

The combined monthly U.S. market share for Chrysler, Ford Motor and General Motors domestic brands is estimated to be 45.4% in June, down from 51.4% in June 2007 but up slightly from the historic low of 45.3% in May, Edmunds says.

There is growing speculation Chrysler might seek to break itself up or file for bankruptcy. The company denies both possibilities. Shares of GM and Ford are down 53.4% and 28% this year, respectively.

Edmunds.com's forecast calls for five of the Big Six automakers to report lower sales than a year ago; only Honda is expected to show an increase. Some analysts predict Toyota will outsell GM in June. However, GM's launch of 72-Hour Zero Percent Financing sale may keep GM in front of Toyota.

The decrease would extend the industry's sales slump to eight straight months, the longest tumble in seven years. Gasoline prices in June topped $4 a gallon for the first time and consumer confidence hit a 16-year low, prompting more Americans to postpone purchases of new vehicles.

Those who did buy were drawn to cars and "crossover" wagons that blend car and truck features, Bloomberg News said. On June 1, the industry had the lowest supply of cars for that date in at least 17 years, according to trade publication Automotive News.

Inventories of compact cars and hybrids are "going down at a rate we've never really seen before, and automakers are caught a bit unprepared," Jesse Toprak, an Edmunds.com analyst told Bloomberg. "It might take several years to fully meet the consumers' demands."

[Teacher Mark 53]

Don't forget the K Car. I doubt they can pull off another scam like that one.

Edited November 18, 2008 by Joe Six-Pack

[NickD 203]

Lee Iacocca's claim to frame was based on two vehicles, putting a large V-8 engine into a compact Ford Falcon chassis with some new sheet metal, thing was a death trap, but a hit. Then joining Chrysler taking advantage of both the DOT dual standard on safety in trucks, much lower, and the dual standard of the EPA with trucks, much higher emissions permitted in trucks, thus came the mini-van, in my opinion, a second death trap, putting a large box this time instead of a large V-8 on a compact chassis frame.

What really hurt the market, the EPA and DOT finally realized the minivan was a passenger vehicle, thus considable emissions and safety equipment had to be added. Believe this was in 1989, but who keeps track of stuff like this, I don't.

What's in favor of the mini's is the new child safety laws, all with car seats of various types. You don't dare put kids in the front, the air bag can kill them. As a matter of fact, just as many kids were killed as adults lives were saved that refused to wear their seat belts. Not a very good record. That leaves the rear seat, and even for a three adult passenger, can only fit two car seats back there. So if you have more than two kids, you are screwed, have to buy either mini or a Yukon. These have a secondary safety factor, if rear ended that causes a gas explosion, can't get the darn kids out of there. A reasonable compromise has yet to be made for families. Even with an eight passenger vehicle, can only carry about four kids.

Mini's are also a b!tch to work on, true, all the new vehicles are, but the mini's are exceptional with very limited access, thus maintenance costs are much greater. They are all built on a compact chassis, yes, this includes Toyota and Honda, and tend to fall apart rapidly after 100K miles, head gaskets, and automatic transmission problems.

Yet another problem for families, much safer for your kids to ride in a Yukon, Expidition, Land Cruiser, etc. But none of these gets very good fuel economy. A toss up between paying high gas prices or safety.

[Teacher Mark 53]

You forgot the Mustang Nick.

http://www.google.com/search?q=lee+iacocca...lient=firefox-a

[NickD 203]

You forgot the Mustang Nick.

LOL, only by name, "putting a large V-8 engine into a compact Ford Falcon chassis with some new sheet metal" that's a Mustang. Was somewhat manageable if you put four 100 pound bags of sand in the trunk, but then the back tires wouldn't squeal as well, squealing tires is cool for some. Today's aluminum pop cans are thick compared to the metal used in the fuel tank. Way at the rear and only protected by even more tin. If you removed the rear quarter panels, rear end would fold up like a jackknife. But hey, it would squeal the rears tires.

[NickD 203]

My out of the box solution was to buy two new Honda DX's, five speed four door sedans, can you believe in 1985, they were around $6,000 each. Ex drove one with an older kid in the front and two smaller ones in the rear. I drove the other with six kids total. These things actually got 46 mpg, so the average was 23 mpg for the family. Cars would do 0-60 in about nine seconds, not bad and got a couple of portable CB radios so we could stay in contact if traffic caused us to separate.

Both cars had AC, cruise, gotta have that, and roll up windows, they never fail, AM-FM with a cassette. Both gave us 200K miles with the only maintenance of brakes, tires, and exhaust systems, and both had good resale value even with that high mileage, man did I get the calls when I sold the first one.

Those were the good old days and Honda is not making cars like that today.

[Saddle Bronc 124]

Don't forget the K Car. I doubt they can pull off another scam like that one.

How specifically (other than being mostly an extended version of the absolutely-sucky Omni) was the K-car a scam?

[NickD 203]

(absolutely-sucky Omni)

Purchased an 80 Omni for a school car for my kids, was happy with it, had the VW engine and drivetrain, and reliable. Paid $1,600 for it used with 18K miles on it, put on another 80K miles and sold it for $850.00. That's less then a penny per mile for depreciation and use. Not quite like buying a Buick Park Ave for $40K and seeing 3 year old models with less than 30K miles on it for $10K, that's a buck per mile. Add maintenance, insurance, and gas, cheaper to take a cab.

Sure was a dog with a 3 speed auto, if following a car doing 50 mph, no way to pass it, unless you could see a clear road ten miles ahead. Not that hot in fuel economy either, 24 mpg on the highway, lucky to get 17 in the city. Did take it down to a south side Chicago suburb, Homewood to pick up a spinet piano. Guy thought I was nuts. Told him if his dimensions were correct, it would fit, it did. So had a practical side to it as well.

The 2.2L that Chrysler designed and added later, I think in 1982, were #######, as well as the rest of the car with fenders falling off and stuff like that. Ours remained rust free is road salt area, the later ones looked like swisscheese. I never purchased any domestic car in the late 70's and 80's, all trash. Did purchase a 92 DeVille, finally a decent car, still have it with a 130K miles on, been very reliable and absolutely rust free, but they sure went down with later models. A friend purchased a 2005 Caddy, spends more time in the shop than on the road. His AC just went out along with the warranty, huge corrosion in the compressor and condenser pouring out all the R-134a. I had to add a 12 oz can of R-12 to my DeVille a couple of years ago to top it off, that is less than an ounce of leakage per year over a 14 year span. Still works wonderfully.

And they want $60K for these things now? Somebody must think somebody is crazy. I gave up on Chrysler in the mid 70's, a New Yorker, was a new problem every week or sometimes twice a week. But made an exception with the Omni that was actually a VW Rabbit.

[Teacher Mark 53]

Don't forget the K Car. I doubt they can pull off another scam like that one.

How specifically (other than being mostly an extended version of the absolutely-sucky Omni) was the K-car a scam?

How many did you see in say 1990? They were garbage.

You forgot the Mustang Nick.

LOL, only by name, "putting a large V-8 engine into a compact Ford Falcon chassis with some new sheet metal" that's a Mustang. Was somewhat manageable if you put four 100 pound bags of sand in the trunk, but then the back tires wouldn't squeal as well, squealing tires is cool for some. Today's aluminum pop cans are thick compared to the metal used in the fuel tank. Way at the rear and only protected by even more tin. If you removed the rear quarter panels, rear end would fold up like a jackknife. But hey, it would squeal the rears tires.

O.K., it flew right over my head!

My out of the box solution was to buy two new Honda DX's, five speed four door sedans, can you believe in 1985, they were around $6,000 each. Ex drove one with an older kid in the front and two smaller ones in the rear. I drove the other with six kids total. These things actually got 46 mpg, so the average was 23 mpg for the family. Cars would do 0-60 in about nine seconds, not bad and got a couple of portable CB radios so we could stay in contact if traffic caused us to separate.

Both cars had AC, cruise, gotta have that, and roll up windows, they never fail, AM-FM with a cassette. Both gave us 200K miles with the only maintenance of brakes, tires, and exhaust systems, and both had good resale value even with that high mileage, man did I get the calls when I sold the first one.

Those were the good old days and Honda is not making cars like that today.

Those were good cars.

[panamania79 2]

Don't forget the K Car. I doubt they can pull off another scam like that one.

Dayum,what an ugly car ! My neighbor used to drive one but it didin't have that fugly simulated wood grain.

My out of the box solution was to buy two new Honda DX's, five speed four door sedans, can you believe in 1985, they were around $6,000 each. Ex drove one with an older kid in the front and two smaller ones in the rear. I drove the other with six kids total. These things actually got 46 mpg, so the average was 23 mpg for the family. Cars would do 0-60 in about nine seconds, not bad and got a couple of portable CB radios so we could stay in contact if traffic caused us to separate.

Both cars had AC, cruise, gotta have that, and roll up windows, they never fail, AM-FM with a cassette. Both gave us 200K miles with the only maintenance of brakes, tires, and exhaust systems, and both had good resale value even with that high mileage, man did I get the calls when I sold the first one.

Those were the good old days and Honda is not making cars like that today.

I LOVE my Honda !

[Saddle Bronc 124]

Purchased an 80 Omni for a school car for my kids, was happy with it, had the VW engine and drivetrain, and reliable. Paid $1,600 for it used with 18K miles on it, put on another 80K miles and sold it for $850.00. That's less then a penny per mile for depreciation and use. Not quite like buying a Buick Park Ave for $40K and seeing 3 year old models with less than 30K miles on it for $10K, that's a buck per mile. Add maintenance, insurance, and gas, cheaper to take a cab.

Sure was a dog with a 3 speed auto, if following a car doing 50 mph, no way to pass it, unless you could see a clear road ten miles ahead. Not that hot in fuel economy either, 24 mpg on the highway, lucky to get 17 in the city. Did take it down to a south side Chicago suburb, Homewood to pick up a spinet piano. Guy thought I was nuts. Told him if his dimensions were correct, it would fit, it did. So had a practical side to it as well.

...

I gave up on Chrysler in the mid 70's, a New Yorker, was a new problem every week or sometimes twice a week. But made an exception with the Omni that was actually a VW Rabbit

As comparison, I'll use a car I had from 1986-1994, a Hyundai Pony with 1.4 Litre engine (dwell-points ignition and manual-choke, rear-wheel-drive--basically most-similar to a Chevette) and 3-speed automatic. Bought new for C$7,500 and sold for C$2,000--admittedly, I put on only 72,000 km (45,000 mi, or in Canadian Hyundai terminology "6 major checkups"--minor checkup at 6,000 km interval was oil-change) on it. I had some thoughts in 1993 of taking it to Atlanta to start work in Jan 1994 (didn't do it as that involved much highway driving in winter, along with several other issues).

I was able to get up to 80 mph (130 km/h) in it, and it gave fuel economy of 25 city (where mostly driven) and 32 highway. It could pass a Chevette or Omni easily IN SUMMER (in Calgary winters, the manual-choke actually gave me a "head-start" over these).

As I remember, the so-called "rabbit drivetrain" in the Omni actually used a modified version with pushrods instead of the Rabbit's original OHC; surmised from the fact that I also tested an original 1979 rabbit owned by a friend (the only option on this one was a 3-speed automatic, so extreme similarity to the Pony on that score) and it was able to beat the Pony on accelerations.

I can actually remember "owning" three Chrysler products (actually, my dad owned two of them):

• 1972 Polara (battleship-sized model, either 360 or 400 V8) bought November 1971; from September 1974 onwards, increasing list of problems (but at least it behaved for the three years till then)
• 1976 Plymouth Fury with 318 V8, which my dad bought in a certain PA dealer (which dealer I also once counselled AJ to avoid like plague) while on a sabbatical-leave in US; even used in US, it was awful--in Calgary, I swear that an Indian-made Ambassador (replica of 1956 Morris Oxford) or Premier (1963 Fiat Millicento) would have been better.
• 1974 'Cuda, bought in 1981; also had 318 V8, but could start within 15 minutes (the Fury at least half-hour) in winter; traded-in for the Pony in 1986

Had Chrysler products as rentals several times--their fuel economy was always atrocious (a mid-size Chrysler Breeze actually got less per tank than premium Park Avenue; subcompact Neon beaten everytime by midsize Grand-Am).

[Saddle Bronc 124]

Don't forget the K Car. I doubt they can pull off another scam like that one.

How specifically (other than being mostly an extended version of the absolutely-sucky Omni) was the K-car a scam?

How many did you see in say 1990? They were garbage.

Agreed already that the K-car was trash (by stating its basis being the Omni).