Write-Off Compact Vans? Not So Fast
21 April 1998
Write-Off Compact Vans? Not So Fast
AGOURA HILLS, Calif., April 21 -- J.D. Power and Associates
1998 North American Compact Van Assessment(SM) reveals that while sport
utility vehicles (SUV) are encroaching on the compact van segment, compact
vans remain an important component of a manufacturer's portfolio-especially as
competition continues to heat up within that market.
"The study confirms that rumors of the demise of the compact van segment
are premature," commented Paul Ballew, chief economist and senior director of
automotive analysis at J.D. Power and Associates. "Essentially, the current
environment is extremely competitive and will become even more so in the
future. This creates some significant challenges for the compact van segment
to grapple with in order to remain viable," Mr. Ballew said.
According to the study, non-Big three manufacturers such as Honda and
Toyota, which currently have 9% of the compact van market, are fueling a
significant portion of the competition by introducing new and improved compact
van products into the marketplace. By the year 2003, the non-Big three are
forecasted to have over 18% of the compact van market as a result of
developing and improving their compact vans.
The study also reveals that one major challenge facing the compact van
segment is how to attract the Baby Boomer population -- who currently
represent about 54% of compact van sales -- as they age and move out of the
child-rearing stage. The study shows that as the Baby Boomer generation ages,
they will desire more from a vehicle than simply convenience, requiring
manufacturers to move compact vans upstream by improving and adding new
features. In addition, compact van manufacturers must extend appeal to
younger Generation X buyers with children, who currently prefer a compact SUV
to a compact van.
Another challenge that the study addresses is the number of compact van
alternatives available to consumers. A new breed of intermediate SUVs has
emerged that provides both the functionality of a compact van and the styling
and performance of a compact SUV. These new products are capturing potential
compact van buyers, as did compact SUVs, but are also winning over current
compact van owners. Migration from compact vans to "intermediate" SUVs, such
as the Ford Expedition, has risen from about 1% in 1995 to 10% in 1997.
Finally, the study examines other core issues of the compact van segment
including its competitive strengths, potential weaknesses and supply-side
changes occurring within the segment.
J.D. Power and Associates is an international firm best known for its
marketing information services in key business sectors including market
research, forecasting and customer satisfaction. The firm's quality and
satisfaction measurements are based on actual customer responses from over one
million consumers annually. With its headquarters in Agoura Hills,
California, the firm also has U.S. offices in Torrance, California; Michigan;
and Connecticut. Its international locations include Japan, Korea, England,
Canada and Brazil.
J.D. Power and Associates can be accessed through the World Wide Web at
http://www.jdpower.com. Media email contact: john.pepitone@jdpower.com.
This press release is provided for editorial use only. No advertising or
other promotional use can be made of the information in this release or J.D.
Power and Associates survey results without the express prior written consent
of J.D. Power and Associates.
SOURCE J.D. Power and Associates
