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

By Paul A. EisensteinSpecial to The Christian Science Monitor / October 4, 1988



Detroit

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.

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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.''