Big vans, small market – why bother?

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Automakers are flooding the U.S. market for big, commercial vans with costly new models, but so many tempting choices can keep profits down. Ford Motor is the arriviste, launching its big Transit van last June

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Automakers are flooding the U.S. big, commercial van market with costly new models, boosting interest and sales.

But the flood also could sap profits by wicking up competition and requiring discounts on what already can be small-margin sales in bulk to fleets.

“Things are getting shaken up in the cargo van world. A rash of new, more-innovative models is replacing the old style,” says Eric Lyman, vice president of industry insights at TrueCar.com.

“With the economy picking up, there’ll be a natural desire to replace” old workhorses, he says.

Ford Motor is the arriviste, launching its big Transit van last year to replace the venerable — or perhaps just old — Econoline, or E-series, the longtime leader in commercial vans.

Ford is building the Transit for the U.S. market at Kansas City. It went on sale in June and by December was an old hand, dominating big-van sales like its predecessor.

“It’s never a bad time to launch good product,” Ford CEO Mark Fields says.

USA TODAY’s James R. Healey breaks down the big differences in the big van market. (MONEY, USA TODAY)

Video Transcript Automatically Generated Transcript (may not be 100% accurate)00:09 Big commercial van. You pay no attention until the plumber
00:12 the electrician shows up. In one of those to fix your
00:15 problems. And automakers old lie I evade paying attention. I’m James
00:21 USA today and we’re looking at the sales race among those
00:24 hoping bands. Our companies dump a lot of time and money
00:32 the past few years and overhauling. Workaday fans hoping to own
00:36 what is that all fairly small market. They have no mastered
00:41 the art of customizing the fans are specific jobs and that’s
00:45 where the money really is the experts say. Lately these very
00:50 an overhaul General Motors models are sales champs. The Chevy G
00:54 van and the similar GMC savanna are so old that GM
00:59 surely must’ve paid off all the tooling and development cost right
01:02 now making them very rich machine for sellers. Well Ford wants
01:06 the top spot back it’s not a line was a big
01:09 seller. That’s discontinued now in its place as a modern Euro
01:13 style commercial band called transit. Introduced only last June it’s taken
01:18 time to build sales momentum body now is giving those two
01:21 GM fans fits on the sales charts. In the modern way
01:25 transit comes in to reroute flights and the tall and what
01:28 you stand up inside the hoops to being overseas in a
01:32 key word. At schools and not mention your back. These signs
01:36 big and he is built atop its patent full size pick
01:40 up and that’s a cost saver. Nissan thinks in V which
01:43 is for release on band could find more of among private
01:47 buyers. Then the trades men and a fleet buyers. Who see
01:52 how that works out. Mercedes-Benz spreader pioneered the new definition of
02:01 big band and it remains a popular model. Sales are stunted
02:05 by tight supplies. And that keeps its resale value high highest
02:09 of any other big names. Chrysler’s ram brand used to share
02:15 version of the springer but since. When he thirteen itself romance.
02:20 That’s adapted from an overseas model perceived Fiat which owned them
02:24 and merge with Chrysler last year. Ram likes to brag is
02:27 the only front wheel drive big man and it shows pro
02:30 master mounting a snowy hill while the rear drive Ford transit
02:34 can’t quite make it. The sales pattern that’s emerging suggests that
02:38 Ford and GM will take the bulk of the sales. While
02:41 sprinter pro master and and V we’ll share the thin slices
02:45 of the remainder. For more. See the cars page on USA
02:52 today dot com.

In January, Transit handily outsold the other fairly fresh faces: Ram ProMaster, which went on sale in 2013; Nissan NV, also in the market since 2013; and the oldest of the new, Mercedes-Benz Sprinter, which was the first Euro-style van when it went on sale in the U.S. under M-B’s Freighter brand, then shared with Dodge starting in 2003, during the time Daimler Benz owned Chrysler Group.

Showing its dominance, the Transit snagged 6,380 buyers in January, vs. 5,071 combined for GM’s Chevrolet Express and sibling GMC Savana.

How the others sold in January:

• ProMaster, 1,580

• Sprinter, 1,505

• NV, 1,059.

The big van “is an extremely important product for us,” say Joe Hinrichs, executive vice president at Ford Motor and in charge of the company’s operations in North and South America.

Transit is a new design that Ford sells worldwide. To save money, the U.S. model was engineered simultaneously with the versions sold in the U.K., China, Turkey and elsewhere — the “One Ford” concept preached by former CEO Alan Mulally.

Ford quit building most E-van models at the end of last year. It will continue some specialty versions for a few more years to reach market niches at a low cost, using the fully depreciated Econoline chassis.

All the newest big vans are, as the Transit, sold worldwide. That makes adding a version for the U.S. market less costly than if a van had to be designed just for the U.S.

For all of 2014, the GM models combined found nearly 107,000 buyers to Transit’s tally of about 20,500 in the seven months it was on sale and supplies were ramping up.

GM spokesman Robert Wheeler says the GM models remain popular, despite their age, because buyers often have so-called upfit customization packages to modify their vans for their specific use: “They’ve found a system that works well on a reliable vehicle and don’t want to depart from their current style.”

He says the big GM vans have “the lowest warranty costs” of any GM vehicle, so they tend to derail business users less often with detours to the dealer for unexpected repairs. For those owners, especially, time is money.

“The market for large vans is still soft, but it’s a market that has prospects that are positive for the future. It’s mainly driven by the housing market. It’s been recovering,” says auto consultant and former dealer Jesse Toprak, head of Toprak Consulting Group.

“Having been on the dealer side, there a chain reaction, especially in small towns,” says Toprak. One business buys the new one and others follow, thinking it must be time.”

He says that it also “could be a brand play” for automakers to bother with new, big vans: “Business owners might buy a Benz Sprinter and then might consider buying the same brand vehicle for their own personal use.”

But the competition is rough. Not only do the big vans vie with one another, they also compete with smaller commercial van models from their own brand.

“If there were not any of the small vans, people would have to buy the big ones,” says Lyman.

Thus, Ford’s success with the compact Transit Connect likely is swiping some sales from the big Transit.

Chevrolet’s new Nissan-made City Express could eat into the big Chevy Express van’s sales.

And Nissan’s own NV 200 small van could erode sales of the big NV.

One feature of the new Euro-style vans is hard to duplicate in a smaller van and will keep big vans on many tradesmen’s priority lists: Available high-roof versions allow users to work inside the vans standing up, instead of stooped.

Lyman: “If you do a lot of work inside the cargo area, the high roof is a godsend.”

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