Chrysler closing minivan plant
DETROIT -- Chrysler's announcement Monday that it's closing a St. Louis minivan plant and cutting production at a St. Louis truck plant underscores the auto industry's rapid deterioration in the past few months.
June sales, due out today, are expected to show the bleeding hasn't slowed.
High gas prices and a weakened economy have battered U.S. vehicle sales, with big SUVs and pickups hit hardest.
But also under stress is the minivan market, which was declining before these issues arose. After dropping below the 1 million mark for two consecutive years, minivan sales this year were off 20.3% through May, and the June numbers are likely to be more bad news.
Dodge Caravan and Chrysler Town & Country minivans are Chrysler's top product. The privately held company makes the family haulers in St. Louis and in Windsor, Ontario. Its next-best-seller is the Dodge Ram, built at the other St. Louis plant and in Oshawa, Ontario.
Chrysler President Tom LaSorda said the slowing economy, escalating oil prices, tight credit and changing tastes prompted the moves: "This environment forces us to make some very difficult decisions to better align ourselves to match market reality."
Minivans were already suffering from an image issue, said Jesse Toprak at Edmunds.com. Customers are turning to more stylish crossovers. Plus, traditional minivan buyers are feeling a squeeze from real estate.
"A lot of families own homes, and most of them got hurt in the decline in housing values," he said. "That doesn't mean they're all involved in foreclosures, but most people still experienced a real erosion of wealth."
Investors have worried that Chrysler's exposure to the large truck and SUV market left it incapable of weathering the downturn. Last week, some Chrysler loans traded at 50 cents on the dollar on rumors it might file for bankruptcy protection, which Chrysler denied.
In fact, it is exceeding targets set by private equity owner Cerberus Capital Management, according to a report obtained by Bloomberg News. "They're ahead of their plan, and doing a good job despite one of the most adverse economic environments in our lifetime," Timothy Price, a partner of Cerberus, told Bloomberg News.
