Old vans are dying, so small businesses are buying
By TOM KRISHER
the associated press | February 27,2014
Maris Angolia, president of Karinís Florist, stands with two of Karinís Floristís delivery vehicles, a 2006 Scion xB, front, and a 2011 Mercedes-Benz Sprinter, behind, outside Karinís Florist, in Vienna, Va.
DETROIT ó To deliver bouquets in and around Washington, D.C., Karinís Florist has two big vans, two small ones and a boxy little wagon thatís clinging to life.
After the Valentineís Day rush, the Vienna, Va., business plans to get a new van to replace the wagon, a Toyota Scion xB with 180,000 miles on it that has faithfully made its rounds since 2006.
ďWeíve got it sewn together with rubber bands and paper clips,Ē said Maris Angolia, president of the family owned business named after her sister.
The van purchase, the second for Karinís in the past four months, is evidence that small business owners ó once too suspect of a wobbly economy to make big-ticket purchases ó are starting to invest in their companies again. The willingness to spend is good news for the auto industry and a positive sign for the broader economy.
The spending is coming for two reasons: Aging vans are simply wearing out. Plus business confidence is growing. A January survey taken for Wells Fargo found that optimism among small-business owners hit the highest level in five years. Most expect increased cash flow and hiring this year. Also, once-tight credit for small businesses has loosened, and borrowing rose in the second half of last year, according to research by Experian and Moodyís.
Commercial van sales last year were up more than 40 percent since 2010, and they rose 9 percent in January even as U.S. auto sales dropped 3 percent, according to Wardís AutoInfoBank.
ďA lot of these contractors have been trying to keep their old products as long as they can,Ē said Peter Bedrosian, senior manager of product planning for Nissan North America. ďThe vehicles are really nearing the end of their useful life.Ē
Van sales are a bellwether for the broader economic recovery since small businesses are reluctant to spend after a recession, said Mike Jackson, director of North American forecasting for the IHS Automotive consulting firm, which predicts commercial van sales will grow 27 percent between 2013 and 2015 to nearly 400,000 per year.
Auto companies have spotted the trend, and theyíre moving quickly to enter a market once dominated by Ford, General Motors and Mercedes. Nissan entered the market with the NV full-size van in 2011 and the NV200, as small van, last year. Chryslerís Ram brand started selling a full-size van last year and has plans for a small van. More products are coming from GM and Ford.
Fordís Transit Connect, a van built on the guts of a compact car, created a new market for small vans when it was introduced in 2009. Before it arrived on the scene, businesses had to buy big vans even if they didnít need them. Now, if owners want better gas mileage and maneuverability but donít need huge cargo space, they have choices.
Earlier this month, GMís Chevrolet unveiled its own Nissan-made small van, the City Express, at the Chicago Auto Show. GM contracted with Nissan so it could bring a van to market quickly to take advantage of growth, said Ed Peper, the companyís vice president of commercial sales.
Ford sold only 8,800 Transit Connects when it was introduced in 2009, but that grew to almost 40,000 last year. Nissanís NV 200 and the Ram Cargo Van, a modified minivan, joined the market, pushing total small van sales to more than 53,000 in 2013. Big vans saw even larger growth, with sales rising from 159,000 in 2009 to nearly 259,000 last year.