Move Over, Toyota Camry: There's a New No. 1 Midsize Sedan

Toyota's Camry has long been the king of the midsize sedan segment, but a new competitor has emerged on top in terms of retail sales.

Feb 22, 2014 at 10:00AM

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Honda's Accord edged out Toyota's Camry in retail sales for 2013. Source: Honda Motor Company

Toyota's (NYSE:TM) Camry has long dominated the midsize sedan segment and has been known for its fuel efficiency, safety, and reliability during its 12-year stay at the No. 1 spot. While Toyota's Camry was again named the best-selling midsize car in 2013, that isn't the whole story. That ranking takes more into account than just sales to typical car buyers. In terms of sales to actual individual car buyers, or retail sales, another vehicle edged out the Camry for the top spot in 2013. In addition to that, other challenges loom for Toyota's Camry, and 2014 could be the year the king of the midsize segment is finally replaced, for good.

New king of the hill
Honda Motor Co. (NYSE:HMC) announced in a recent press release its Accord was the best-selling car to individual car buyers. In case you don't follow the automotive industry, there are really two ways to look at vehicle sales figures. Total manufacturer sales can be broken down into two major segments: retail sales and fleet sales.

Toyota's overall sales continued on top with more than 408,000 vehicles sold in 2013. However, its retail sales to individual car buyers accounted for only 342,007 units of that figure. The rest were fleet sales to rental companies or businesses. 

Honda has taken a different strategy, and a potentially more profitable one at that. Honda's Accord sold far fewer overall vehicles at 366,678 units; however, the Accord sold a vast majority -- 360,089, to be precise -- to individual car buyers. That makes Honda's Accord the most purchased vehicle in terms of retail sales to individual customers.

While Honda's Accord only owns the top spot in terms of retail sales, don't be surprised if the Camry loses its overall No. 1 position in 2014 as well.

Recalls and competition
For Toyota, an automaker that has long been known for reliability, it will face challenges holding up its reliable brand image after multiple, and massive, recalls. Consider that last year Toyota had three of the top five largest recalls in the U.S. market, and four of the top 10 according to Cars.com's list of top 10 recalls. No other competitor owned more than one spot of the top 10 recalls. In total, Toyota recalled nearly 3 million vehicles with its four largest recalls. 

While recalls are simply a part of the automotive industry, the increasing number of public recalls for Toyota will have some effect on sales -- especially considering the company's largest recall in 2013 involved the Camry.

The 2012-2012 Camry, Camry Hybrid, Avalon, and Avalon Hybrid sedans had problems with the air conditioner condenser unit housing, which could cause a short circuit that could affect the airbags and power steering of the vehicles. The recall was served to roughly 800,000 vehicles.

In addition to the recalls, which could put a dent in sales of the Camry, Ford has recently stepped up its game with the Fusion and brought a more aggressive styling to the typically bland segment.

Fusion
Graph by author. Source: Company specific sales reports.

If the Camry's competition, namely the Accord and Fusion, continue to gain steam, expect a new overall mid-size sedan leader -- and soon. Toyota acknowledges the issue and plans to address it with the next Camry design. "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 at the 2014 Detroit Auto Show. We'll have to wait to see if the Camry's new design will be enough to keep its crown -- I have my doubts. 

The car buying secrets you must know
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Daniel Miller owns shares of Ford. The Motley Fool recommends and owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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