Write-Off Compact Vans? Not So Fast
21 April 1998
Write-Off Compact Vans? Not So FastAGOURA 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