Chrysler's 'future' on the line

Production was to start in Windsor, Ont., this morning on Chrysler's 'RT' minivan. If all goes according to plan, the vehicle could earn the company $64 billion in five years. Chris Vander Doelen reports.

Chrysler's financial health will largely be riding on the new generation of minivan that was to begin advancing on aWindsor's biggest assembly line shortly after 7 a.m. today.

The 2008 minivans the company has codenamed "RT" -- the fifth generation of the family vehicle it created in 1984 -- is the most important vehicle in the Chrysler Group's lineup.

Based on 2006 sales, the new vans could be worth at least $64 billion in sales for Chrysler over five years.

For some auto analysts, the question is not whether the vehicles will be a hit, but rather, how big a hit.

"It's going to be very successful," predicts Dennis DesRosiers, president of DesRosiers Automotive Analysts of Thornhill, Ont. "But it does have the chance of being unbelievably successful. It could go way over the top."

A slowing economy could be the only factor that might potentially keep a lid on sales of the new van, he said.

"There are a lot of variables ... the market has to hold, the marketing of the new vans has to be right, and pricing is key. But there are scenarios out there under which this vehicle skyrockets."

Reid Bigland, president of DaimlerChrysler Canada Inc., says the company is excited about the sales potential of the new Dodge Caravan and Chrysler Town and Country.

"It's a critical product for us and it has been for 23 years," Mr. Bigland said in an interview this week. "But with Ford and General Motors backing away (from building minivans) this has created an opportunity to grow our market share."

Mr. Bigland says some of the innovations in the new vehicle "open up a whole new dynamic" in how Chrysler will market the vehicle and take on its remaining competitors.

Erich Merkle, an automotive analyst with IRN Forecasting of Grand Rapids, Michigan, says the launch of the RT is probably more important to Chrysler than the launch of the last all-new minivan, the RS, was in 2000.

While Ford, Mazda and GM no longer build minivans, Honda and Toyota's vans are more competitive today than they were in 2000. In fact, most critics consider the Japanese products superior to Chrysler's vans.

Mr. Merkle believes the RT vans are such a major departure from the old vans in looks, performance and features, they could do damage to even stronger competitors this time.

"It's (an) awesome product -- and I don't say that about much. In my opinion, the Chrysler minivan is the Swiss Army knife of minivans."

In addition to seats that swivel to face a pop-up table, the new vehicle features airplane-like LED reading lights for most seats, "halo lighting" of the interior, an umbrella holder, a factory-installed rechargeable flashlight, and standard electronic stability control.

Mr. Bigland said that moving Chrysler upscale in the minivan wars is a key part of the company's strategy. While the Dodge Caravan has been the uncontested 800-pound gorilla in Canadian minivan sales -- they sold 62,000 of them last year, hogging 41 per cent of the market -- it had to concede the high-margin, luxury end of the market to Honda and Toyota.

Only 1,000 Chrysler Town and Country minivans were sold in Canada last year. This year the company will increase marketing of the new Town and Country as it goes after the higher end of the Canadian market.

The official launch of the RT vans, with CEO and president Tom LaSorda presiding in his home town, won't take place until late July or early August, after Windsor Assembly's summer shutown.

But the $1-billion U.S. launch, which is approximately what most new cars and trucks cost to bring to market these days, has actually been under way for about three months. The company has retooled major portions of the 1.5-kilometre-long Windsor plant and retrained its workforce of about 5,000 to build the new vehicles.

Barring production glitches, a few weeks after shutdown, Chrysler Canada hopes to be churning out a new Chrysler or Dodge minivan every minute, 24 hours per day, six days per week. They will generate about $30,000 each for the company for the lifespan of the vehicle, which could be anywhere from four to seven years.

Mr. DesRosiers feels fuel prices could have a major impact on new van sales. Minivans generally get better mileage than SUVs and even "crossovers," which some other analysts tout as the up-and-coming segment that will hurt minivan sales.