Chrysler Minivan Pricing is Key

Chrysler has cut the prices for its next generation of minivans, and some experts say that’s not a bad decision.

“If Chrysler can cut the price of its 2008 model minivans this fall and still make a profit — and there’s no reason to assume it won’t make a profit — then the price cut is a wise move,” said Erich Merkle, an analyst with IRN Inc. of Grand Rapids, Mich.

While it’s cutting prices, Chrysler is also adding 35 new items to the vans, from electronic stability control and side curtain airbags to second-row seats that swivel to face the third row, with a table in between where kids can eat lunch or play games while they travel.

“They’re raising the number of features but lowering the price,” Merkle said. “It means being able to sell based on value and reduce the need for massive incentives that at times were $5,500 to $6,000.

“As General Motors and Ford have gotten out of minivans, Toyota Sienna and Honda Odyssey sales have benefited. The lower prices for the Chrysler vans will win back some of the van sales GM and Ford left on the table,” he said.

“It’s fair to say minivans aren’t going away, but now Chrysler has set the benchmark for the industry to follow by adding features and lowering the price.”

Merkle said it would be foolhardy not to expect Chrysler to protect its turf when it comes to minivans, because it was Chrysler, under then-chairman Lee Iacocca, that invented the segment in the ’80s. Chrysler has dominated that segment ever since.

In 2006, Chrysler sold 360,000 minivans. Last month, year-to-date Caravan sales had fallen 57.4 percent and Town & Country sales had fallen 59.1 percent.

Steven Landry, executive vice president for North American global sales and marketing, said he expects overall minivan sales to stay at about 1 million units a year, even with GM and Ford out of the game, and that Chrysler expects to “continue its leadership” in the segment.

Related
New 2008 Chrysler Minivans Cost Less Than ’07s (KickingTires)