Minivan competition intensifies as segment keeps shrinking

The minivan market is shrinking, but it isn’t a lost cause.

Chrysler, Toyota, Honda and Kia are doing battle for the remaining consumers still drawn to the segment’s practicality even as three-row crossovers eat into the base of would-be minivan buyers. Conquest opportunities may be slim, but brands are working to stand out with bolder styling, hybrid engines and all-wheel-drive capability.

Those still loyal to minivans are seeing automakers raise the bar as the minivan segment evolves.

Toyota said it deliberately avoided a boxy look with the 2021 Sienna, which will be offered only as a hybrid. Chrysler, on the other hand, believes it can bring in some of the 700,000 people who switched from passenger cars to utility vehicles last year with its sleekly designed Pacifica, which is gaining the option of all-wheel drive and the next-generation Uconnect system this year.

Meanwhile, Kia gave a preview of the next-generation Sedona when it unveiled the global Carnival, which has the styling of a crossover but the sliding doors of a minivan.

Tim Kuniskis, head of passenger cars for Fiat Chrysler Automobiles North America, said during a media preview of the 2021 Pacifica that car buyers switched to utility vehicles to get more space, size and capability. Those factors, he said, give consumers “a perception of more safety.”

The 2021 Pacifica was freshened with a restyled grille to go along with a new LED taillamp spanning the width of the vehicle, similar to the Dodge Durango and Charger.

Chrysler hasn’t offered an awd minivan since 2004. The brand also added the Voyager last year as a value play and effectively a substitute for the Dodge Grand Caravan, which was the top-selling minivan in 2019 and will be discontinued at the end of the current model year.

Matt DeLorenzo, managing editor of Kelley Blue Book, said minivans will never be the big sellers they were in the 1980s and ’90s, but their practicality means “there will be buyers who need them more than they want them.”

“There is a definite niche to be served by a few players,” DeLorenzo said in an email.

Sam Fiorani, vice president of global vehicle forecasting for AutoForecast Solutions and owner of three minivans over the years, said the vehicles haven’t been able to overcome a negative image, even as automakers update them with sportier looks.

Consumers would rather drive “cooler” crossovers, he said, such as the Ford Explorer, Mazda CX-9 or Chevrolet Traverse.

Fiorani, who uses his 2014 Chrysler Town & Country to haul his son’s go-karts with ease, said it’s a sad phenomenon because minivans are “arguably the most efficient packaging of a vehicle.”

There’s still loyalty in the minivan segment for automakers to tap into. A KBB.com study last year showed that 46 percent of minivan owners said they planned to replace one minivan with another.

Alison Anziska, vice president of marketing and analytics at Edmunds, has owned three Honda Odysseys over the past decade. She has five children and said the Odyssey’s comfortable seating and ample cargo space make it great for road trips.

But the Sienna’s hybrid powertrain is appealing, she said, so whether she remains with Honda will depend on how the Odyssey evolves. Her youngest child is 4, so she plans to stick with minivans for a while but sees herself moving on at some point.

“I don’t see the minivan as a permanent car decision,” Anziska told Automotive News. “I think there comes a point in time when that level of practicality is not needed on a daily basis and you can switch back to a nice luxury SUV for the same price.

“But I still consider myself [in] those prime years. You’re in the minivan market for, like, 15 years, and then you’re ready to move on when you’re not lugging all that sports equipment and children’s backpacks and stuff.”

The spirited competition among minivans can be seen in the rollout of electrification. The Pacifica used to be the only hybrid minivan in the market — and it’s still the only plug-in available — but the fourth-generation Sienna is changing that, as the only hybrid minivan available with awd.

The fact that the Pacifica has added an awd option on its gasoline version, DeLorenzo said, shows this part of the segment is heating up.

“As far as hybrids go, Sienna does represent a threat for buyers looking for alternative powertrains, but the Pacifica’s trump card is its plug-in capability and the fact that it’s eligible for the federal tax credit for electric vehicles,” DeLorenzo said. “Chrysler is hoping that the Grand Caravan buyers migrate to the Voyager and perhaps more of [the] Voyager production will pick up the rental-car business owned by Grand Caravan.”

A frame job: Morgan moves to a new architecture after 84 years

Change comes slowly to some British automakers.

The original Land Rover, for instance, came out in 1948 and soldiered on with minimal changes until 2016. The first-generation Mini Cooper debuted in 1959 and hung around until 2000.

But one British automotive architecture is the granddaddy of them all: the steel ladder frame under the Morgan Plus 4 sports car.

The shape of the car changed a few times since the steel ladder frame was introduced in 1936, but the rugged frame remained true to the original design, featuring a leaf-spring rear suspension and an unusual sliding-pillar front suspension.

The setup ensures the tire tread stays flat on the road as the shocks compress and rebound.

Morgan last week built its last steel-framed sports car and shipped it to one of the company’s most loyal customers.

Morgan has switched to a lighter, stronger bonded-aluminum platform, an architecture introduced last year on the Plus 6.

Morgan says the 84-year production run of its original steel frame is a world record. The total number of cars built using that frame over those 84 years: 35,000.

How to succeed in era of touchless auto service

In 2018, I wrote an article about how your dealership’s service department is moving to your customer’s home, and that message could not be more applicable today. Because of the pandemic, touchless automotive service is the name of the game. This has been a consumer preference for some time. Case in point: Apple stores have been offering no-contact service since 2001.

Dealers have long been incredible survivors. As Winston Churchill is famous for saying, “Never let a good crisis go to waste.” What can you do to come out of this swinging and be even more efficient? How can your dealership further improve the customer experience with touchless service in your service department?

You can choose to be the Usain Bolt of the service world and use the right training regimen and processes to trounce your competition, or you can be stuck in the past. My advice is to study what other successful businesses have done.

Apple has been the leader in retail sales per square foot — more than $5,500 reported in 2017 — for a good reason. The process is focused on flexibility and the consumer experience and is completely touchless. The customer can schedule visits on the Apple app, and the stores simplify checkout by bringing a touchless credit card reader to the customer.

Think about how you can make your employees more nimble, offering the ultimate in convenience and transparency in servicing customer vehicles. Take Tesla, for example. If owners want their vehicles picked up for valet service, they can simply text their spare key to the service adviser.

To win, consider the following:

1. Ease of scheduling. Test your online scheduler. Most appointments are made on a mobile device. Does the mobile version work well, or is it masked by a bunch of pop-ups? How many clicks does it take to make an appointment? It is important to not burden guests with complicated service menus and shop-loading constraints. While I know everyone, including automakers, likes shop loading, website scheduling should be simple and totally integrated with your communications.

2. No-contact pickup and delivery service. This will need to continue for some time. Do you have the right processes in place for this to be successful now and in the future?

3. Video. Do you conduct an initial video walk-around when the loaner leaves the dealership or when you hand it over to the customer at check-in? Do you use a multi-point inspection video tool to better explain to customers repairs needed for their vehicles? This builds trust and transparency. Customers are more likely to approve work when they can see it. Data insights that myKaarma aggregated across select dealers show the average customer-pay acceptance rate more than doubles when they can see it in a transparent and understandable way, such as pictures and videos.

4. Payments. Do you offer online payments? How about allowing service advisers to take customer payments to eliminate lines at the cashier’s desk and avoid unnecessary contact? This also builds a better relationship between the customer and their adviser by being the single point of contact. You may find more customers are suffering financial hardship because of the pandemic, so consider offering service financing as well. There are some great companies out there that do this.

5. Business development center for service. Are you conducting outbound calls and texting to solicit service business? How about declined-service follow-ups? Many dealerships leave a lot of money on the table by not following up. Consider building your own service business development center, training its staff and including texting for declined service.

If you think I am simply blowing smoke, consider this story from Steve Simmons, service manager at Mercedes-Benz of Long Beach in California. At the start of the COVID-19 pandemic, his service department business declined by more than 70 percent. The number of cars serviced per day dropped from more than 100 to a low of 17. To combat this, the dealership started making phone calls to solicit business, offering its White Glove no-contact vehicle pickup and delivery service and offered online payment functions. The average appointment count quickly grew to just more than 40 a day, and it rose to more than 50 cars per day in the service drive, allowing the dealership to keep its doors open and the majority of its staff working.

Many dealerships were not prepared for the pandemic. You can be prepared with the right tools that allow your service department to win. Be convenient to do business with and emphasize transparency in every interaction.

Pickups salvage disastrous Q2

Full-size pickups became the U.S. auto industry’s largest segment in the second quarter as the coronavirus pandemic slashed new-vehicle sales by roughly one-third.

Big pickups outsold compact crossovers, which had been No. 1 every quarter since sedans fell out of favor with consumers in recent years. Including the midsize segment that Jeep and Ford have reentered, one in four vehicles sold by nonluxury brands from April through June was a pickup, according to the Automotive News Data Center.

“Even when the vehicle market goes completely sideways, the truck market stays straight and true,” said Karl Brauer, executive publisher of Kelley Blue Book. “This is particularly good news for domestic brands like Chevrolet, Ford and Ram, all of which rely heavily on high-profit truck sales. This trend will likely continue as the economy recovers and consumers look to start delayed home improvements, relocations and other truck-friendly activities.”

Excluding Mercedes-Benz and Jaguar Land Rover, which are expected to report their results this week, U.S. new-vehicle sales plummeted 34 percent in the second quarter.

Industry sales suffered as plant shutdowns reduced inventories and many dealerships had to temporarily close or complete transactions online to comply with government restrictions. Pickup volume declined less than most other segments, in part because of the 0 percent financing offers automakers rolled out as the pandemic roiled the economy. Many dealers said they sold the majority of the pickups they had in stock.

“GM entered the quarter with very lean inventories and our dealers did a great job meeting customer demand, especially for pickups,” Kurt McNeil, General Motors’ U.S. vice president of sales operations, said in a statement. “Now, we are refilling the pipeline by quickly and safely returning production to pre-pandemic levels.”

GMC Sierra sales dipped 5 percent in the second quarter, and Chevy Silverado volume fell 14 percent. Both nameplates were among the few to post increases for the first half of the year.

Sales dropped 23 percent in the second quarter for the Ford F-Series and 35 percent for the Ram pickup line. Sales of midsize pickups — such as the Toyota Tacoma, Ford Ranger and Jeep Gladiator — slid 16 percent. Pickups represented 25 percent of nonluxury brand sales, up from 21 percent a year earlier.

Other segments that fared better than average include subcompact crossovers, down 8.3 percent, and large premium crossovers, down 8 percent. Meanwhile, sales of subcompact cars and minivans fell by more than half.

Ford Motor Co. posted second-quarter sales increases for just two vehicles in its lineup: the Explorer, up 12 percent, and the Ranger, up 20 percent. Large utilities and pickups are performing better because people need them for work, and affluent consumers who often buy such vehicles have been less affected by the pandemic, said Mark LaNeve, Ford’s vice president of U.S. marketing, sales and service.

“The unemployment issue, unfortunately, has hit the service industry hard — younger people,” he told Automotive News. “The fact that pickups are needed for work and vehicles like Expedition and Explorer are doing better doesn’t surprise us.”

Michael Martinez and Nick Bunkley contributed to this report.

Dream Cruisers won’t take no for an answer

The Woodward Dream Cruise, a massive celebration of car culture that fills the main drag of Detroit’s suburbs every August, has been canceled this year.

Officially, at least.

But that decision is unlikely to deter many of the hot-rodders and muscle car owners from showing up and clogging the eight lanes of Woodward Avenue throughout the summer, especially after months of keeping their cars parked in the garage during government stay-at-home orders. Some are even looking forward to a less-structured event.

“Oh darn no city events or corporate booths,” one commenter wrote on the Dream Cruise Facebook page. “Guess we can get back to what this cruise is really about. Cars and cruising!”

Added another commenter: “I’m sorry board of the Woodward cruise, you aren’t in charge. The thousands of gearheads and car enthusiasts are. We will still be out in August celebrating!!!”

The Dream Cruise, which celebrated its 25th anniversary last year and lists Ford Motor Co. as its presenting sponsor, typically attracts more than 1 million people.

Six of the nine municipalities along the 16-mile route passed resolutions or wrote letters asking for the Aug. 15 cruise, billed as the world’s largest one-day car event, to be canceled.

“Our concern is the public who wants to come out and watch the cruisers who cruise,” Michael Lary, director of special events for the city of Ferndale and president of Woodward Dream Cruise Inc., told the Detroit Free Press. “We’re concerned about social distancing and being considerate enough to wear face masks.”

Driver-assist tech savings should benefit all

After spending billions of dollars and years of time chasing the dream of autonomous vehicles, the auto industry is beginning to realize that — while there have been some excellent technological developments along the way — true Level 5 and even unsupervised Level 4 autonomy are still well into the future. Some executives in the industry are beginning to question the potential return on their already-sizable investments.

But here’s the thing: While Level 5 autonomy is still years if not decades away, returns have been won in increased automotive safety. But those returns have gone largely to insurers, whose claims have been reduced as a result of increased standard safety equipment, instead of to the industry that developed the technology. That should change.

Last month, Consumer Reports analyzed crash data and determined 16,800 to 20,500 lives in the U.S. could be spared annually if widely available driver-assist technologies were standard across the industry. The organization estimated that automatic emergency braking, lane-departure warning, blind-spot warning and pedestrian-detection system standardization would save 11,800 lives annually. Another 1,300 lives would be saved through vehicle-to-vehicle communications, and up to 7,400 deaths could be avoided with technology to prevent intoxicated driving. The total economic impact of automobile crashes in 2018, according to the organization, was estimated close to $800 billion.

Several automakers find value in making driver-assistance technologies standard on their offerings because it gives them a competitive edge and drives down development and supply costs. Yet for the most part, insurers do not yet reward consumers with lower premiums. If they did, or were forced to through regulation, those savings could underwrite broader standardization of driver-assistance systems by allowing automakers — or at least their new-vehicle customers — to recoup their investments and see a return.

Yes, vehicles may get more expensive, but total cost of ownership can go down if insurance claims drop as a result of the technology. This space has long argued that improved automotive safety should be a top priority industrywide, and standardizing driver-assistance systems would make it so. But it’s up to elected officials nationwide to make sure the auto industry gets fair returns for safety gains.