Chrysler's competitors out to overtake its lucrative lead in minivans

Minivans are ``the family jewels'' of the Chrysler lineup, accounting for a huge share of the automaker's profits and sales. Despite the best efforts of its competitors, the Chrysler Corporation is likely to remain the king of the minivan market well into the 1990s. But that doesn't mean the competition won't keep trying to crack Chrysler's near-stranglehold, as a series of recent product announcements demonstrates.

In the 1950s and '60s, the station wagon was the symbol of suburban family life in America, with room to fit a clutch of kids and luggage. Back then, vans were something hippies drove, or something you'd use for work.

But that all changed in the 1980s, as the domestic auto industry responded to the last oil crisis and the demand for smaller automobiles.

But while this downsizing resulted in more fuel-efficient cars, it took its toll on seating and trunk space.

``Without the huge sedans and station wagons, we needed another class of vehicles to carry around large families. We needed compact vans,'' says Chris Cedergren, an auto analyst with J.D. Power & Associates of Agura Hills, Calif.

In 1984, Chrysler introduced the first true minivan. There were a lot of skeptics, Mr. Cedergren recalls, but with their front-wheel-drive technology and a relatively aerodynamic shape, Chrysler's three versions of the minivan delivered acceptable fuel economy and were able to haul a lot of cargo and people in relative comfort.

American drivers fell in love.

In 1984, minivan sales were fewer than 100,000 a year - barely 5 percent of the total United States light-truck market. Chrysler essentially owned the market that year.

Responding to that surge in demand, Chrysler opened up a second plant to produce an extended version of its minivans, and as a result it has continued to monopolize the market.

The No. 3 domestic automaker is expected to sell 480,000 units this year. That's out of total US minivan sales of 700,000, or better than 12 percent of the total American light-truck market.

And industry experts are quite confident the minivan boom is going to continue. Cedergren estimates that sales could top the 1 million mark - or 20 percent of the light-truck market - by the early 1990s. If anything, Chrysler Motors chairman Gerald Greenwald says that forecast is conservative.

``It isn't going to stop at a million,'' he says. ``We have created a functional alternative to [station wagons] and four-door sedans,'' sales of which run as high as 5 million units a year.

With demand continuing to outstrip its production capacity, Chrysler has been in the enviable position of never having had to offer incentives on its minivans, even though rebates of $1,000 or more are common on most of the automaker's other products. Without those costly discounts, minivans have turned into Chrysler's leading moneymaker, responsible for an estimated 50 to 60 percent of the corporation's total profits.

``The minivan may be the most important part of the Chrysler family lineup,'' says executive vice-president John Withrow, Chrysler's chief product planner. ``We often call them the family jewels.''

You're likely to strike a much better deal with one of Chrysler's competitors. If you lump them all together, their combined sales total barely 40 percent of the US minivan market.

General Motors Corporation is the No. 2 producer, primarily with its Chevrolet Astro. Sales this year should total about 140,000 units.

But GM could hit it big late next year with the introduction of its APV and Lumina APV, two versions of a strikingly aerodynamic, plastic-bodied minivan that it will sell through both its Chevrolet and Pontiac divisions.

Unlike the existing Astro van, the APVs will be front-wheel drive, a factor that seems to make a big difference in the minds of many consumers.

The Ford Motor Company is the domestic also-ran, expected to sell only about 128,000 of its Aerostar minivan this year. The Aerostar may be facing consumer resistance because of its rear-wheel drive, many analysts believe.

But Ford is also looking for a bigger piece of the minivan pie, and it could find one in the early 1990s, when it introduces a new mini it is designing as part of a joint venture with Nissan, its erstwhile Japanese competitor.

Ford vice-chairman Harold (Red) Poling says the billion-dollar partnership is a way to get the most out of the minimum investment.

``It allows us to join Nissan to realize the best of Japanese and American design, engineering, and production methods,'' he says, ``and it allows us to share the cost of producing a new vehicle, so that we can offer a more extensive product line than would otherwise be possible.''

Under the new joint venture, Ford and Nissan will each get about 65,000 minivans annually, beginning in the 1992 model year.

That Nissan would turn to Ford for help isn't surprising, when you realize the Japanese are the weakest players in the minivan field. As a group, they control barely 3 percent of the market niche. But they haven't given up.

Mazda recently introduced a new vehicle it is calling the MPV - short for multipurpose vehicle, and if the automaker meets its target - 40,000 units a year - it could surpass the combined 1988-model-year sales of all Mazda's Japanese competitors combined.

``The MPV is the first serious attempt to design a useful, multipurpose vehicle specifically for the US market,'' says Mazda vice-president Michinori Yamanouchi.

With all the new minivans coming for the 1990s, some analysts wonder whether Chrysler will be able to hold its lead.

Mr. Greenwald says he isn't especially worried. The current Chrysler design should continue to sell out through the early 1990s, he believes, when the automaker will introduce its next-generation models.

``If I could create a Santa Claus list for 1989, No. 1 on my list would be another half a plant of minivans,'' Greenwald says.

``But that's not going to happen.''

So, although Chrysler's sales will be fairly stable, its share of the booming market is likely to shrink. But the minivan will still account for roughly 25 percent of the company's total car and truck sales, and remain its most profitable product.