The first of Chrysler's next-generation minivans rolled off an assembly line Tuesday, a critical launch for the automaker as it tries to remain the dominant player in the minivan segment and struggles to return to profitability.
“This minivan is the kind of great product that sets Chrysler apart,” Chrysler LLC President Tom LaSorda told hundreds of cheering employees at the Windsor Assembly Plant, where four generations of his family have worked and where the minivan was born 24 years ago.
The debut of the 2008 Dodge Caravan and Chrysler Town & Country comes the same month as Chrysler's sale to the private equity firm Cerberus Capital Management LLC, which vowed to leave the automaker's turnaround plan in place even as it demoted LaSorda and named Bob Nardelli the automaker's new chairman and chief executive. Nardelli wasn't at the minivan launch, but Canadian Auto Workers President Buzz Hargrove said he had an hour-long meeting with LaSorda and Nardelli on Tuesday morning.
“He said all the right things in terms of what we wanted to hear. They want to take Chrysler back to greatness,” Hargrove said of Nardelli. “We'll wait and see.”
LaSorda said the next-generation minivans have 35 new or revised features, including second-row seats that swivel 180 degrees so passengers can sit around a table. The company spent $1.4 billion on the redesign, including a $511 million investment in the Windsor plant.
LaSorda said he is confident about the demand for minivans despite evidence that some customers have been rejecting minivans in favor of car-based crossovers. Minivan sales peaked at 1.37 million in 2000, but sales were about 970,000 last year, down 12 percent from 2005. Of those, 38 percent were Chrysler minivans.
LaSorda wouldn't say how many of the new minivans Chrysler hopes to sell, but said Chrysler will be a major player, especially since Ford Motor Co. and General Motors Corp. are abandoning the segment. LaSorda said internal research shows Chrysler could win some customers who now drive minivans from Toyota Motor Corp. and Honda Motor Co.
Aaron Bragman, an auto industry analyst with the consulting firm Global Insight, said the new minivans are a good effort but he's not convinced Chrysler's swiveling seats will win over new customers. Bragman predicts that the minivan market will start growing again around 2010 when more Generation X and Y buyers start having families.
“This is a big component of Chrysler's revenues. It's not a segment they can abandon,” he said. “They do tend to know the minivan customer very well. They've done a lot of research and they've kept in touch with those buyers.”
The minivans are scheduled to hit showrooms in the fall. The Dodge Grand Caravan SE starts at $22,470, while the Chrysler Town & Country LX starts at $23,190. The two share the No. 1 selling minivan spot.
Their prices compare with a starting price of $24,155 for the Toyota Sienna, the second-best seller.
While Chrysler made $1.8 billion in 2005, it lost $618 million in 2006. The losses brought on the sale to Cerberus and forced Chrysler to announce a plan to shed 13,000 hourly and salaried jobs in the U.S. and Canada by 2009.
LaSorda on Tuesday tried to put to rest speculation that he could leave the company after contract talks with the United Auto Workers union end. The UAW's current contract expires Sept. 14.
“People have contracts, and I entered into a new one, and I intend to be here for a long time,” LaSorda said.
