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Last Updated: Tuesday, 9 January 2007, 18:19 GMT
Chasing the baby boomers
By Steve Schifferes
Economics reporter, BBC News, Detroit Motor Show

Chrysler people carrier
Chrysler hopes people carriers will pull it out of the quagmire

One of the more extraordinary sights at the Detroit Motor Show was that of Tom LaSorda donning a white apron and attempting to cook up a meal to mark the launch of the new Chrysler people carrier, the Grand Caravan.

The Chrysler chief executive looked distinctly uncomfortable.

He later told this reporter that his wife had shopped him to the celebrity chef during rehearsals, pointing out that he was little seen in the family kitchen at home.

The cookery show was all part of the advertising campaign for the people carrier, which also featured a cover band playing Bob Dylan's Like a Rolling Stone, and a fake model of a 1960s bread delivery van, out of which emerged the new vehicle.

The reason for these goings-on was simple: Chrysler is trying to reach the ageing baby boomers, those born between 1945 and 1960, and who are now reaching retirement age.

This is the largest group of car buyers in the US, because of the bulge in the birth rate between those years.

They buy five cars on average after retirement and as a whole have a high disposable income, having benefited from occupational pensions and high house prices.

Concept invented

Chrysler is the market leader in minivans, or people carriers, having sold 11 million units in the US in the last 22 years since they were first launched.

Now Chrysler wants the baby boomers to buy a new people carrier to replace the one they bought 20 years ago and might use to transport their grandchildren, according to Rebecca Lindland of Global Insight.

This car is one of our key pillars. I will sleep easier at night knowing that it is a success
Tom LaSorda, Chrysler chief executive

She believes the success of the people carrier is absolutely critical to Chrysler's chances of a turnaround after it plunged deeply into the red last year.

"They essentially have all their eggs in one basket," Ms Lindland says.

And Chrysler's chief executive Tom LaSorda pretty much agrees.

"This car is one of our key pillars," he told the BBC. "We invented this concept.

"I will sleep easier at night knowing that it is a success."

Uncertain trend

It is not just the company's future, but Mr LaSorda's own, that could be on the block.

US-German parent company DaimlerChrysler, created in a merger in 1998, is deeply concerned about its poor performance, and so are its shareholders who are pressuring the company to sell it.

DaimlerChrysler's chief executive Dieter Zetsche - who used to run Chrysler - told the BBC that he was "very unhappy" with Chrysler's performance but hoped that the turnaround plan, which will be announced in February, would do the trick.

Mr Zetsche denies any plans to sell the company and pointed out that its problems could be temporary and cyclical.

"No one knows if there is a long-term shift in trends," he said.

Need to adjust

Sean McAlinden, chief economist at the Centre for Automotive Research, disagrees.

He says the people carrier market is, at best, stable rather than growing.

Tom LaSorda and Dieter Zetsche
Mr Zetsche (right) is disappointed with Chrysler's performance

Chrysler - like Ford and GM - will have to adjust to the reality of making fewer, smaller cars to survive, and even to be profitable enough to be worth selling.

But it is not just Chrysler which is targeting the baby boomer generation at the motor show.

The boom in crossover vehicles - the smaller sized sports utility vehicles, or SUVs, with a high driving position but flexible seating - is also due to baby boomers.

Ford predicts the crossover market will grow to three million units a year by 2010, compared with 2.6 million now and only 200,000 in 2000, largely at the expense of the bigger SUVs.

The main reason is that baby boomers are downsizing their lives and their vehicles, Ford believes.

Perhaps surprisingly, the most common occupation of SUV buyers is the retired, confirms Toyota sales executive Jim Lentz.

There are two markets out there. The US and the rest of the world
Sean McAlinden, Centre for Automotive Research

Environmental concerns and the desire for better petrol mileage are also driving the switchover.

Not so surprisingly, nearly every volume car producer at Detroit has plans to launch a new crossover vehicle. Many have done so long ago.

Ford, itself, launched the Edge in 2006, while Hyundai is showing off its new Veracruz, which competes with the new Nissan Rogue and the Toyota Highlander - soon to have a hybrid version.

And GM has also launched a new family of crossover vehicles, showcasing its GMC Acadia and Saturn Outlook at Detroit, with the Buick Enclave arriving in spring 2007 and a new Chevy version sometime later in the year.

Unique US market

Ms Lindland says the new trend shows that the US car market is still highly segmented, and that carmakers have to be nimble in order to be successful across the board.

"There are three hundred million individuals out there, and they all want their own type of car," she says.

For Toyota's Mr Lentz, the lesson is that the US market is unique and very different from car markets in the rest of the world.

"Only the US has this big a difference between generations, due to the huge size of the baby boomer generation," he says.

Mr McAlinden agrees: "There are two markets out there," he says. "The US and the rest of the world."

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