THE MINIVAN was once a niche product with few manufacturers. Although the minivan segment is still growing fast, it is now crowded with carmakers.
The segment was defined in Europe by the Chrysler Voyager and Renault's Espace, together with a number of Japanese imports, such as Mitsubishi's Space Wagon. Most of the big carmakers have since developed a multi-purpose vehicle or people-carrier.
Ford and Volkswagen built a joint production line in Palmela, Portugal, to produce a single minivan with three different badges. The Ford Galaxy, VW Sharan and Seat Alhambra are almost identical, but their pricing, marketing, warranty terms and volumes vary greatly from country to country.
Those three vehicles built at the AutoEuropa joint venture accounted for about a third of European minivan sales last year. Sales of the Volkswagen Sharan rose 3.9 percent over 1996, while sales of the Ford Galaxy fell 13.8 percent. Sales of Seat's Alhambra jumped 149 percent, but the vehicle only arrived in most markets in March 1996.
PSA/Peugeot-Citroen and Fiat also jointly produce minivans on the same line at Lieu Saint-Amand, France.
Renault aims to displace Volkswagen from the No. 1 slot with a revised Espace. Espace sales rose 48 percent last year, and the long-wheelbase Grand Espace has been brought to market.
Small vans attack large vans
Among the crush of new competitors are small minivans, such as the Toyota Picnic and the Renault Scenic, which was voted European Car of the Year in 1997. Renault sold 182,000 Scenics last year, compared with 24,900 in 1996, its debut year. France is the leading market, with 70,000 units.
More small minivans will join the market. Both the GM Astra and Ford Escort replacements will have van versions eventually, and niche importers like Hyundai are planning to enter the segment.
The arrival of Renault's Grand Espace and Chrysler's marketing effort for its Grand Voyager may help preserve sales of the larger minivans, by making the 'regular' size bigger.
Prospects for growth
Chrysler is optimistic about the future of larger minivans. Tom Kowaleski, Chrysler Europe's vice president for marketing and communications, says that smaller vans such as the Scenic will have minimal impact on the regular minivan segment.
'We haven't seen any effect,' he says. 'In fact, our research suggests there are two distinct buyer groups. We think the impact will be on the C class - that's where these vehicles are resting.' At Chrysler, the C class is the lower-medium segment.
Kowaleski does not believe that the presence of smaller vans will lead to large minivans getting larger still.
'There is a great deal of differentiation right now,' says Kowaleski. 'Nobody is confusing a Scenic with an Espace. In our case, we also see a place for both the standard wheelbase and the extended wheelbase - Voyager and Grand Voyager.
'We have watched this very closely. We do not see Scenic types of vehicle impacting sales of the traditional MPV.'
The newer, smaller minivans such as the Renault Megane Scenic and Toyota Picnic 'will prompt a big sales explosion over the next five to 10 years,' says Brigitte Delvanne, who works in Toyota's product planning department based in Brussels.
'The MPV will become the main body style in the C sector - and maybe the B sector (supermini) also. The format will progressively take over as the mainstream vehicle, taking market share from sedans and the hatchbacks.'
The Toyota Previa currently has around 3 percent of its segment and the Picnic has 5 percent, says Delvanne, 'so we have some way to go.'
Europe lags North America
The European minivan market lags behind that of North America because minivans are big and expensive by European standards, says Garel Rhys, director of automotive industry research at the University of Wales in the UK.
In North America, says Rhys, minivans were designed and priced for the mainstream, blue-collar market. 'The minivan effectively replaced the big American station wagon.'
Three related segments - minivans, sport-utilities and pickups - each account for around two million sales.
'That is six million sales of vehicles for 'leisure' purposes,' says Rhys. 'But in Europe, there is virtually no market for pickups, the sport-utility sector is very much a 'fashion' market and the minivan market is also relatively small - because of its origin in the USA.'
Rhys believes that demand for full-size minivans will remain limited 'unless manufacturers find ways of dropping the prices of the existing products - which they could, but only if they had bigger volumes.'
Limits to growth
Kowaleski agrees that some predictions about the minivan segment are over-optimistic.
'It is showing good growth, but it's not grown as large as some predictions.' he says. 'Two years ago, some people said the multi-purpose vehicle sector would reach around 600,000 units by the turn of the decade. We don't think that's going to happen.'
Kowaleski believes some of the new entrants to the segment 'will perhaps regret entering it. We certainly don't regret them entering it. We feel we occupy a very good position in the segment ... despite our relatively small share in Europe. We have done remarkably well, considering all the new players coming in.'
Renault's Espace no longer dominates the segment, 'but we really believe in the segment,' says Renault spokesman Tim Jackson. 'We have repositioned ourselves at the top end, quite deliberately. The advent of the Grand Espace has underlined that - to such an extent that even we are not certain of the volumes we will sell of those two cars.'
Jackson says Renault aims to achieve what Chrysler has done with the Voyager and Grand Voyager. 'There is basically a 50-50 split between (the two vehicles) in Europe. We see ourselves getting to be in a similar position.'
The Espace, says Rhys, 'was made in a very expensive way.' It was priced like an executive car, as were its rivals. The result was that they were 'beached' in that price sector.
High prices, big engines and 'being a very different type of vehicle to a car' constrains growth in the large minivan segment, says Rhys.
He expects the real growth elsewhere: 'It's the smaller MPV that might have a fighting chance of replacing station wagons in their category - or by becoming an alternative to the Golf-sized vehicle.