Toyota Plans to Do "Something" With Its Camry

Toyota is planning a big design change for its best-selling midsize sedan, the Camry. But will it be enough to keep Camry on top of the sales charts?

Jan 29, 2014 at 6:30PM

Kudos to the Toyota (NYSE:TM) Camry for being America's best-selling midsized family sedan for the 12th consecutive year. Midsize cars make up nearly 18% of the U.S. automotive market, and most automakers have their hopes tied to this segment. In the last few years, the market for midsize sedan has evolved from a two-car contest between the Camry and Honda's Accord to a race of nearly 10-odd cars.

As the buyers get spoilt for choices, segment leader Camry has started feeling the heat from newer rivals. In 2013, it almost came close to losing its crown, but ultimately finished the year with a masterly win. Toyota's bosses assert that Camry will soon get a makeover and continue to rule the U.S. midsize market. But are these claims realistic?


2012-2014 Camry XLE 012. Source: Toyota

Taking hits but selling well
"Camry's taken some hits on styling, but it's still selling well. But we need to create better design for Camry in the future," according to Kevin Hunter, Toyota's U.S. design chief, while speaking at the Detroit Auto Show recently, which aptly summarizes Camry's current situation.

Camry had a slow start last year, and Toyota had to boost sales through aggressive incentives. In August 2013, the Japanese auto giant gave an incentive of $2,560 per Camry -- $681 higher than previous year and $367 more than the industry average. When a best-selling car like Camry needs incentives to lure buyers, it's evident that times have changed.

 Camry Sales


This change in the midsize sedan market has come with the arrival of some really sporty and stylish cars. Models like the Ford (NYSE:F) Fusion and Nissan (NASDAQOTH:NSANY) Altima have shown buyers that a family sedan need not always be boring. The duo has captivated buyers with their trendy looks, sports-car-like handling, and affordable pricing.

Despite supply constraints Ford sold 295,280 Fusions in 2013, up 22.4% from 2012, while Nissan Altima sales increased by 5.9% to 320,723 units. With Ford adding capacity for Fusion, sales could go even higher this year. Additionally some big launches are lined up for this year including a revamped Hyundai Sonata, a new Chrysler 200, and Subaru Legacy. No wonder the plain looking Camry is feeling the heat, and mulling over design changes.

"It's safe to say we'll be doing something with it."
That is how Bill Fay, group vice president of the Toyota brand, voiced the sentiment of  the company at the LA Auto Show in November.

Roughly one-fifth of Toyota-brand sales in the U.S. come from the Camry, and with the U.S. being one of the company's biggest markets, it's essential that Camry maintains its market share here. Toyota sells 400,000-odd Camrys in the country every year. So the mandate has come from Toyota's supreme commander, President Akio Toyoda himself, that the next generation of Camrys will have a "Waku-doki", or heart-racing, design.

While it's still unclear what this heart-racing design actually entails, Toyota's U.S. design chief Hunter has hinted at a "more emotional, more impactful design". Management is emphasizing that the interior packaging and exterior looks will be more aggressive.

But Toyota has to be careful with the modifications, as a complete overhaul can offend the estimated 5 million Camry owners in the U.S. The company also has to contend with the fact that the Camry sells so well because it is relevant for an extensive selection of buyers. A dramatic style change can make the car lose its mass-market appeal.

"We'll make some effort through the collective team to keep it No. 1 next year."
Fay said that about the Camry at the LA Auto Show, and the timing of the remodeling remains unclear, but the industry is busy speculating about any possible design tweaks that Camry could see this year. Anything positive on the styling front can give the car a big sales boost. Toyota will keep the sales momentum high through dealer incentives. It is offering cash back incentives and no-interest financing on the Camry and some other models.

Camry has also made big strides in car safety. Last October, Consumer Reports magazine withdrew it's safety recommendation on Camry, Prius V, and RAV4 following the cars' dissatisfactory performances in the Insurance Institute for Highway Safety, or IIHS, crash test. This was a big blow to the Camry's image as it has had class-leading safety standards. However, on a subsequent test by the IIHS conduced on moderate overlap (front and side) crash, Camry secured a good score and soon regained its lost position on the Consumer Reports recommendation list in December.

Last word
Camry has been America's best-selling midsize family sedan for good reasons -- it's reliable, comfortable, wallet-friendly, and has a broad appeal. The only piece that's missing has been on the styling front, which has allowed rivals to start encroaching on Camry's territory. The good thing is that management understands this, and is planning to take corrective actions. If Toyota's new FT-1 concept is an indication of its design capabilities, we could definitely expect a positive outcome from Camry's redesign -- whenever that happens.

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