Cost of gas, soccer-mom image doom minivans

updated 7:48 p.m. ET June 8, 2008

DETROIT - Asked recently how the U.S. minivan market has been faring, Nissan's Dominique Thormann had a concise answer.

"It collapsed," said Thormann, a senior vice president of Nissan North America.

While the rapid decline in pickup and sport utility sales has been grabbing the headlines, minivan sales have also taken a tumble, falling 20 percent in the first five months of this year.

And unlike trucks, which could rebound once the construction industry picks up, it's unclear if minivans have a future in the U.S. market or if they're being killed off by crossovers and the stodgy taint of the soccer mom image.

"The future of the segment is up in the air," said Tom Libby, senior director of industry analysis for the Power Information Network, a division of J.D. Power and Associates. Libby said the advantages of minivans — the sliding doors and height — has been eroded by the negative image of minivans and consumer preference for SUV-like styling.

The slump reflects what's going on in the wider U.S. market. Overall auto sales were down 8 percent through May, and big vehicles like minivans took the brunt of it because of high gas prices. Large pickup truck sales fell 21 percent, while large SUVs were down 32 percent.

It doesn't help that families — minivans' target audience — have been particularly impacted by rising gas and food prices, falling home values and more difficulty in borrowing money, said Rebecca Lindland, an auto analyst for the Waltham, Mass.-based consulting company Global Insight.

"Everything that a family needs is more expensive right now, and so the last thing they're looking at is do they need to replace their Honda Odyssey," she said.

But even before the economy took its toll, families were migrating away from minivans. U.S. minivan sales peaked at 1.37 million in 2000, 17 years after Chrysler introduced them. They've been falling at a steady rate since then, to 793,335 last year. This year, sales are expected to fall below 650,000 for the first time since 1986.

One reason is the rise of crossovers, which offer similar space but more car-like handling. In March through May of 2004, 12 percent of minivan owners trading in their vehicles bought a crossover. That rose to 26 percent in the same period this year, according to the Power Information Network. Crossovers accounted for just 4 percent of the U.S. market in 2000; they now account for 19 percent.

Another reason for minivans' decline is that some players have left the market. General Motors Corp. will stop making minivans by the end of this year, while Ford Motor Co. quit producing the Ford Freestar and Mercury Monterey in 2006.

Thormann said Nissan has no plans to exit the market for now, despite a 34 percent drop in sales of the Nissan Quest so far this year. Thormann said that first, Nissan needs to figure out where large SUV buyers are going and whether they will choose to downsize to minivans.

"The fact is that the minivan hit a particular need. Then, that same need was satisfied — because fuel was cheap, because affordability was high — with an SUV," he said. "But once you're stuck up there and you're thinking, 'Oh, wait a minute, do I need to be a little bit more rational and do I need to come down a notch without sacrificing much utility?' Does the minivan become an alternative to that or is it the crossover?"

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