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

Thu, 05 Jun 2014

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 has already announced that a new Town & Country will arrive in the next few years, the Kia Sedona has just been given a massive redesign and both the Toyota Sienna and 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 of Cool Springs in Tennessee, told Automotive News. "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 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 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, Ford and Hyundai that's allowed the offerings from Chrysler, Honda and 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, the appeal of money has a way of doing strange things to automakers.

By Brandon Turkus