The Van-Tastic Voyage

The following story appeared in the Q2 2010 issue of Auto Finance Executive, with the above headline.

They say familiarity breeds contempt, but that’s not true among van buyers. The Ford E-series and its General Motors equivalents, the Chevrolet Express and GMC Savana, have been on sale for more than a decade, and their erstwhile competitor from Chrysler, the Dodge Ram van, served the market for 32 years. Every year, about 350,000 vans are sold in the U.S. — mostly to fleets and businesses.

Until 2003, there wasn’t much that ever changed in the van market. But 2010 marks the debut of a very new kind of van —Ford’s Transit Connect — and the sixth year of sales for the Dodge Sprinter, a big European-style van as different as the Ford E-series is familiar. The Sprinter’s future may also involve more commercial vehicles from Chrysler’s new partner, Fiat, so 2010 could be a pivotal year for vans.

With hardly any media attention ever paid to these arks of commerce, we take a closer look in this issue at the van market and its future players.

Ford and GM

Ford and GM’s vans, essentially two basic vehicles, collectively comprise more than 94% of all vans sold in the United States — at least they did until 2009. Both companies’ vans have been face-lifted in the past few years to keep them fresh and to bring their looks more in line with their manufacturers’ pickup lineups. Essentially toolboxes on wheels, these are tough vans built for high mileages on totally conventional platforms — front engine, rear-drive, full frame.

Differences center mostly around handling and features. The GM vans are somewhat newer and have a more car-like driving feel. GM’s superior dynamics are countered by features introduced this year by Ford — a new dashboard, a backup camera, ESC, and E85 capability. The new dash integrates a computer that can provide high-speed internet and a novel system of RFID radio tags for tools stored in the van, resulting in fewer misplaced tools and equipment losses.

The Ford and GM vans are well-suited to their tasks, but they also have flaws. Handling and economy are poor, and storage height is limited unless a structure-weakening high-top is added. The vans, like Ford’s Crown Victoria police interceptor, have existed for many years with few, if any, direct competitors. Until recently, that is.

The Other Way

The ancient Dodge Ram van, which debuted when President Richard Nixon was in his first term, was a relic by the time of the Daimler-Benz merged with Chrysler. DaimlerChrysler was determined not to continue such an archaic vehicle, but didn’t want to design another U.S.-style van. Instead, it sourced the European market Sprinter van, a tall, long European design powered by small, economical engines — primarily diesels. DCX debuted the Sprinter under the Freightliner trucks brand in 2001 to test the waters, delivering the Dodge version two years later.

The Sprinter is a unit-body vehicle, a solid shell, rather than a body mounted on a frame like the domestic vans. There is no mistaking it for a Ford or GM van. A short wheelbase Sprinter is a hairsbreadth shorter than the longest E-series, and the floor-to-roof height is taller than the overall height of all E-series — enough for a 6’5” person to stand upright inside the Sprinter. In fact, even the smallest, lowest-roofed Sprinter can hold 50 cubic feet more stuff than the largest Express.

The size of the Sprinter has meant that larger versions are seen by some, including expediters and large delivery companies and passenger services, as alternatives to more conventional box trucks and buses, not just as vans. Still, the Sprinter handles more like a car, owing to its lower center of gravity and tighter unibody. Its overall size, however, hinders its maneuverability.

Cost is the primary reason the GM and Ford vans outsell the Sprinter by 19 to 1 — and that’s because of the Sprinter’s complicated production line, which involves shipping partially assembled vans from Europe to North Carolina and then finishing them. Sprinter prices start around $10,000 over the base prices of the E-series and
Express/Savana, and maintenance costs are higher, too. Despite this, about 20,000 Sprinters were finding homes in the U.S. every year, until the economic downturn last fall submarined vehicle sales.

The Sprinter is one of the last vestiges of the DaimlerChrysler union, and in early September, 2009, Daimler announced that it would pull the Sprinter from Dodge dealerships on Jan. 1, 2010 — part of the messy divorce. Sprinters will now be sold under the Daimler Vans label at 120 selected Mercedes outlets, instead of the 350 Dodge dealers that currently carry the Sprinter, leaving Chrysler with no van and some choices to make; and Mercedes with the odd task of selling commercial vans alongside luxury cars.

The Ford Transit Connection

The Sprinter represents the biggest of the European-style vans — but there is also a class of far smaller, more economical vans in the world market, oft en based on cars. The first of these to debut in North America is the useful Ford Transit Connect, conceived as a “little brother” to Ford’s larger Transit — Europe’s best-selling van and a competitor of the Sprinter. The idea was to blend the dynamics of a car-based van with the utility of a purpose-built cargo van. The Connect was injected with a modicum of style by designer Peter Horbury, best known for the new generation of “curvy” Volvos.

The result of this development, built on a platform donated by the Ford Focus, is a vehicle tailor-made for all the needs of small businesses. With an MSRP starting at $8,000 under the E-series, a city fuel rating of 22 mpg, and excellent driving dynamics, the Connect’s appeal is obvious. The only drawback may be its low overall payload capacity (1,600 lbs. max).

At a time when small businesses are looking to save money and are attempting to build efficiencies, the Transit Connect is resonates. The Transit Connect went on sale in the United States in mid-July, and nearly 3,000 of them reached customers in the first six weeks of delivery. Connects are selling within 10 days of arriving at the dealer, a rapid pace for a hot car, let alone a van.

The Connect also puts Ford in the enviable position of offering a product to which there is little direct competition. Chevrolet’s HHR van is much smaller on the inside, and hasn’t really caught on with commercial customers. Chrysler offers a cargo variant of the Dodge Grand Caravan with available options to make it more acceptable for business use, but the Connect drives better, gets better gas mileage, and has a slightly larger payload capacity.

The Future

With the Sprinter heading out the door from its dealers and the Transit Connect signaling a different direction for the future of the American van market, Chrysler is looking to new partner Fiat for the future. Fiat has an entire lineup of very good European-style vans — on the big side (Ducato), the small side (Fiorino/Scudo/Doblo), and even an entire line of commercial trucks (Iveco). The most likely candidates to replace the Sprinter is the Ducato, which is similar in size and layout to the Sprinter, but enjoys a wider range of engine choices and is cheaper to build. Better pricing could also make this van more attractive than the Sprinter.

Fiat currently sells the Ducato in Mexico, where it’s just a few hundred dollars pricier than a Ford E-series. Speaking of the E-series, Ford Chief Executive Alan Mulally has already indicated that the E will eventually be replaced by the Transit. The best-selling van in Europe since 1965, the Transit is a large unibody van with small, economical engines like the Sprinter, but is arguably a more sophisticated machine and can be ordered in more varieties than the Sprinter. The Transit can be specified with front-, rear-, or all-wheel-drive and with an amazing array of engines and body options. A new Transit had been due in 2012, but the financial crisis pushed that plan back. It is more likely that the next-generation Transit will arrive in 2014. When it does, it will almost certainly be manufactured and on sale in America. Like Fiat with the Ducato, Ford is testing the market in Mexico with the current generation Transit.

GM has access to Euro-style vans, too — the Opel Vivaro and Movano, which are both products of a joint-venture with Renault-Nissan. But for now, the Express and Savana will persist, while GM’s eyes are devoted to fixing its car line and brands.

The potential connection with Fiat’s European products and the success of the Connect may, however, send a
signal to other manufacturers that it’s not that hard to bring in their products. The market may only be 500,000 sales a year in good times, but manufacturers like Hyundai and Nissan also have off -the-shelf potential products, and will be watching.

-Alex Kwanten, member, International Motor Press Association