Recently Chrysler Group has received a lot of attention for strong sales performances in the new car market place.  Taking a deeper look at things, Chrysler, Dodge, and Jeep brands have all posted continuous year-over-year gains since July of 2011, which is especially impressive considering that they are the only domestic manufacturer during this time period to accomplish such a feat. 

Not that long ago Chrysler Group was near extinction, but in what seems like almost overnight they have turned things around and have left the dark days of their bankruptcy well in the rearview mirror.  Since the beginning of the year Chrysler, Dodge, and Jeep brands have averaged annual sales growth of 80%, 20%, and 31%, respectively, which has been driven primarily by the availability of better new products that retail customers actually want to buy.  Lots of things have changed over at Chrysler Group throughout the years, but one thing that has remained constant is the Dodge Caravan mid-size van and the large percentage of sales placed into rental fleet. 

First introduced for the 1984 model year, the Dodge Caravan and all of its variants have been an integral part of Chrysler Group’s success.  Throughout the years, many other models have come and gone but the Caravan nameplate has perennially captured a large percentage of total brand sales. 

The latest rendition of the mid-size van was introduced for the 2011 model year and has been sold under the Chrysler Town & Country and Dodge Grand Caravan nameplates.  Combined, sales for the 2011 model year reached 134k new units, and sales for the 2012MY quickly hit 116k through March.    These are great sales figures, but nearly 44k and 67k of these total sales were to rental companies for the 2011 and 2012 model years, which equates to a nearly 33 and 57 percent rental penetration rate for each model year.

Every manufacturer wants to sell as many vehicles as possible but as NADA has often stated in the past, having such a large number of sales going to rental companies will have a negative impact on late model used vehicle prices when newer units enter the used market in large quantities and over a concentrated period of time.
In fact, we may be on the cusp of seeing this come to pass for the latest two model years.  For example, after an extended period of appreciation that stretched back to November 2011, used prices for 2011MY Dodge minivans have fallen by 7% over the past seven weeks.  This compares to a smaller 5% change for non-Chrysler product. 

The fall in prices coincides with an infusion of 2011, and although in much smaller quantities, 2012MY off-rental units hitting the market, as over the past ten weeks the number of ’11 – ’12 Grand Caravans sold at auction has jumped considerably. 

We’re not only seeing prices take more of a dramatic dip, but we’re also seeing them compress as 2012MY prices are coming in very close to their 2011MY counterparts, which is something we’ve seen in cases like this in the past.

This has translated into the average trade-in value for May’s edition of the Official Used Car Guide for the 2012 Dodge Grand Caravan SXT being only a small 8% more than the 2011 equivalent’s value ($20k v. $18.5k; GC Mainstreet); that’s with a years’ worth more mileage mind you. 

Based on past history, moving forward we can most likely expect to see steeper depreciation for the 2011MY as prices move to strike more of a balanced relationship with incoming 2012MY units; an example of this can clearly be seen occurring in line chart above for the 2010 and 2009 model years. 

NADA Used Car Guide analysts predict that June mid-size van values will decline somewhere in the neighborhood of 1.5 – 2 percent relative to May, but expect to see even more significant downward price movement for the rental-heavy Town & Country and Grand Caravan.