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GM Scraps Plan For Minivans, Shifts Focus To Crossovers
Dow Jones

DETROIT -(Dow Jones)- General Motors Corp. (GM) on Wednesday said it is walking away from plans to develop a new family of minivans due to a shift in product strategy that has the auto maker focusing intently on the growing crossover segment.

While the auto maker now sells minivans under various name brands, sales of those models are on the decline and the vehicles are scheduled to be phased out later in the decade. The company had been working on a plan to launch a completely redesigned series of minivans in 2009 that would have shared an architecture with new full-size crossover SUVs that are just now hitting the market.

"We've determined that we will not develop a minivan off our large front-wheel drive architecture," GM spokesman Chris Pruess said Wednesday. He said the company's new crossovers, which are based on car-like platforms, or chassises, but are designed to look like SUVs, will directly compete with the shrinking minivan segment. He said there are already three credible players in the minivan segment and the company has decided to allocate capital in other areas at this time.

DaimlerChrysler AG's (DCX) Chrysler Group, Toyota Motor Corp. (TM) and Honda Motor Co. (HMC) collectively own 54% of the minivan market, with Chrysler's models grabbing 29% of the entire minivan market share, according to Ward's Automotive Reports. The entire U.S. minivan segment is off 10% in 2006, while crossover sales are up 9%.

GM's move was first reported by the Detroit News on Wednesday. The auto maker's decision to step back from the once-booming minivan segment follows a similar decision by Ford Motor Co. (F), which once was among the dominant players in the U.S. minivan market. Ford lost ground earlier this decade due to a poorly received redesigned product and is working to launch a full-size crossover capable of competing with GM's offerings.

Pruess declined to comment on whether minivans are a profitable product for GM, and he said the company is not immediately giving up on the segment. At least some of the current GM minivans will remain on sale until at least 2008.

The company may be in talks with other auto makers to co-develop a minivan that could be produced under a joint venture. Chrysler has such an arrangement with German competitor Volkswagen AG (VOW.XE), and Nissan Motor Co. (NSANY) Chief Executive Carlos Ghosn said last week the company is very open to such an arrangement in the U.S. with a U.S. auto maker.

Pruess declined to comment on GM's plans concerning a joint venture.

-By John D. Stoll Dow Jones Newswires; 313-226-1249; john.stoll@dowjones.com


  (END) Dow Jones Newswires
  11-22-06 0941ET
  Copyright (c) 2006 Dow Jones & Company, Inc.
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