By Mike Colias
The humble cargo van is having its moment.
Sales of vans used to transport packages and other
internet-ordered items are booming, driven by a continued surge in
online shopping and the popularity of free delivery services, auto
executives and analysts say.
Auto makers are notching record van sales and adding new
features to the traditionally no-frills vehicles as they vie for a
bigger share of a category that executives expect to outpace the
broader auto market in coming years.
Helping fuel the growth is Amazon.com Inc.'s expanding
package-delivery network. The e-commerce giant in 2018 started a
service that outsources its delivery operation to small businesses,
which in turn employ drivers who lease or rent vans. Gray Amazon
vans have become a common sight in neighborhoods across the country
during the busy holiday-shopping season.
The growth goes beyond Amazon's network. U.S. sales of cargo
vans used in fleet services rose 5% last year and are on pace to
jump 19% this year, compared with flat sales in the broader vehicle
market, according to research firm J.D. Power. Sales are expected
to stay strong through mid-decade as ever-shorter delivery times
drive demand for smaller, more-versatile vehicles, analysts and
executives say.
Retailers of all sizes are responding to rising consumer demand
for free delivery, an expectation set by Amazon's Prime service,
said Satish Jindel, president of research firm SJ Consulting Group
Inc.
That has translated to brisk business for van makers, including
Daimler AG, which makes the Mercedes-Benz Sprinter van; Ford Motor
Co. and its Transit van; and Fiat Chrysler Automobiles NV's Ram
brand, which makes the ProMaster van.
Startups also are benefiting. Michigan-based Rivian Automotive
in September landed an order from Amazon to purchase up to 100,000
electric delivery vans over the next decade, with the first ones
showing up on the road in 2021.
Cargo vans like the Sprinter or Ford's Transit are an ideal size
to handle the shorter routes and compressed delivery times needed
for same-day parcel service, as well as grocery and restaurant
delivery, analysts say. The vans have roughly one-third the
interior space of a typical box truck used by United Parcel Service
Inc. or FedEx Corp.
Amazon drivers typically handle smaller packages and may reload
their vans several times during the day, rather than staying out
for an entire shift, said Cathy Roberson, chief analyst with
market-research firm Logistics Trends & Insights LLC.
"These vans are much more conducive to same-day delivery and the
narrower delivery areas" of Amazon drivers, said Ms. Roberson.
This year, American consumers will get 8.6 billion packages
delivered domestically, according to projections from SJ Consulting
Group. However, the growth in delivery services is increasing
congestion in cities, particularly during the holidays, prompting
many local governments to put in specialized pickup/drop-off zones
and explore other ways to alleviate curbside traffic.
Delivery vans have emerged as a welcome growth niche in a U.S.
auto market that is easing after years of strength.
Vans are a staple of the commercial-vehicle market, a category
largely defined by sales to business and government buyers and
dominated by Ford, GM and Fiat Chrysler. Commercial sales typically
account for 20-25% of overall volume at the Detroit companies and
help lessen their exposure to the ups and downs of the retail
business, which focuses on vehicles sold to consumers at
dealerships.
Ford posted record third-quarter sales of 65,288 vans. The auto
maker spent more than $1 billion to retool its factory in Kansas
City, Mo., to produce the Transit van starting in 2014. Long a
staple of commercial fleets in Europe, the Transit is lighter and
more fuel efficient than the bulky E-Series vans it replaced, and
is offered with varying roof heights and layouts to give buyers
more choice.
Ford also has been adding features not typically found on
commercial vans, including safety gear like automatic emergency
braking and creature comforts such as internet connectivity.
"There's a lot of big upside as the need and use of our vans
continues to grow with businesses that are growing in that space,"
said Jim Baumbick, a Ford vice president in charge of global
product strategy.
A Ford spokeswoman declined to say whether it has sold vans
directly to Amazon, though some of Amazon's delivery contractors
use leased or rented Ford Transit vans.
Amazon has about 30,000 delivery vans in use by its network of
800 contracted delivery businesses, which now includes about 75,000
drivers, an Amazon spokeswoman said, declining to specify models.
Last year, the company said it ordered 20,000 Sprinter vans from
Daimler, which opened a new South Carolina factory that year to
supply vans to the U.S. market.
FedEx since spring has purchased more than 2,700 cargo vans in
response to rising e-commerce business, a spokeswoman said.
Ram ProMaster sales have grown each year since Fiat Chrysler
introduced the model in 2015 as a more-nimble, easier-to-drive
option to its previous trucklike vans. The company is straining to
meet demand and has boosted output several times at its ProMaster
factory in Saltillo, Mexico, a spokesman said.
Sales of General Motors Co.'s Chevrolet Savana and GMC Sierra
vans are up about 8% this year through mid-December. A GM
spokeswoman attributed the increase to demand from large online
retailers but declined to name them.
Write to Mike Colias at Mike.Colias@wsj.com
(END) Dow Jones Newswires
December 24, 2019 05:44 ET (10:44 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.