Minivan segment now seeing lower sales but higher profit margins

Article by Christian Andrei, on June 3, 2014

Recent sales figures of minivans pale in comparison with the numbers a decade ago. But despite that, carmakers and dealers are earning more from them – because in-demand higher-end minivans do deliver good margins. Brian Heney, director of operations for the Kelly Automotive Group, remarked to Automotive News that unlike before, customers are now just choosing between just two shopping options.

He noted that minivan customers now know what they are looking for and “they pay for it.” Kelly Automotive Group sells Chrysler Town & Country, Honda Odyssey and Nissan Quest. He remarked that loaded up minivans do appeal a lot to customers.

The good margin from selling minivans may have prompted carmakers to quietly get ready for battle for customers. For one, Chrysler unveiled in May that it plans to consolidate its segment-leading minivan offerings under the Chrysler brand while dropping the Dodge Grand Caravan.

The move is expected to make customers purchase more premium minivans under the Chrysler brand, which entry level product is over $10,000 pricier than a similar offering by Dodge version that carries a base price of $21,590, including shipping.

Chrysler is also planning to roll out a plug-in hybrid version of the Town & Country in 2016. Ford, which has left the minivan market eight years ago, is looking to re-enter the segment through its Transit Connect Wagon, which looks, operates and feels like a minivan, although the carmaker is marketing it as an "unminivan."

Kia Motors America, meanwhile, unveiled at the 2014 New York auto show a stylish Sedona minivan, which will be available this fall. Kia, however, refers to the Sedona as a multipurpose vehicle. [source: automotive news - sub. required]

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