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Who's Winning the Battle Between the 2014 Ford Fusion and the Toyota Camry?

Sales of Ford's Fusion were up 9% in March, thanks to some careful discounting. Photo credit: Ford Motor Co.

The first two months of 2014 were rough for new-car sales across the board. 

But last month was apparently a really good time to buy a midsize sedan -- as long as it was a Camry or Fusion.

While Nissan (NASDAQOTH: NSANY  ) Altima sales were down 5%, and Honda (NYSE: HMC  ) Accord sales dropped 7%, Toyota (NYSE: TM  ) said sales of the Camry rose 11%. And Ford (NYSE: F  ) posted a 9% gain for its Fusion.

What's the story?  

It's not just about incentives
It's easy to think that "incentives" -- those "cash back" or cheap-financing deals we see advertised on TV -- are the story here. But it's a little more complicated than that.

Interestingly, according to Kelley Blue Book estimates, Toyota's incentives on the Camry actually fell in March. KBB says that Toyota spent about $2,650 per Camry in incentives in March, down from about $3,200 in February.

But the Camry's average transaction price also fell slightly from February to March, from $24,335 to $24,169, KBB said. That suggests that Toyota dealers might have been eager to make deals on the Camry for other reasons. 

Toyota wants to see the Camry out-sell its rivals again in 2014. Photo credit: Toyota

Like if Toyota was encouraging them to push the Camry.

That appears to be what happened. Sales of the Camry rose, but sales of Toyota's other cars -- the Yaris, Corolla, Prius, and Avalon -- were all down.

So why would Toyota want to push the Camry? Because Nissan's Altima outsold the Camry in the first two months of 2014, and it's really important to Toyota that the Camry continue its reign as America's best-selling car.

Meanwhile, over in Dearborn, it was about incentives
At the end of February, Ford had a bit of a problem. 

Through the first two months of 2014, sales of its much-admired Fusion were down 14.3%. Severe winter weather in many parts of the U.S. had kept buyers away from new-car dealers, but meanwhile, the two factories that build Fusions had kept humming.

That meant that inventories were rising. Ford needed to sell some cars.

So Ford did what automakers do in that situation: It boosted its incentives -- not hugely, but by about $200 over what it spent in February, KBB estimates, to about $3,050 per Fusion. 

That's high, but it's still about $400 less than Nissan was spending, according to KBB. And the Fusion's average transaction price, pegged by KBB at $26,029, was higher than the Camry's -- and the Altima's, and the Accord's.

As we saw at Toyota, the Fusion's success may have come in part at the cost of sales of other Ford cars. Sales of the Fiesta, Focus, and Taurus were all down in March.

But Ford likely accomplished its goal: It kept pace with Toyota, it sold down some inventory, and it maintained a strong average transaction price (and therefore, good profits on each car sold). 

The upshot: There's a big battle unfolding in this segment
Nissan has been very aggressive with discounts and pricing on its Altima for some time. That has disrupted the usual pecking order in the midsize sedan segment. 

That's a big deal. As a group, midsize sedans are America's biggest-selling cars. 

Keeping the Camry on top of this segment is a big priority for Toyota. Ford probably won't catch the Camry -- it probably can't even make enough Fusions to catch the Camry right now -- but obviously it wants to do as well as possible.

Meanwhile, Honda could well make a move to boost its Accord. 

Long story short: This is going to be a battlefront all year. And if you want a new car, the next few months might be a great time to look at a new Fusion or Camry.

What do you think? Who's going to win this one? Will Ford gain ground on Toyota's Camry like it did last year? Or will Toyota make sure the Camry wins out? Scroll down to leave a comment and let me know. 

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 06, 2014, at 2:04 PM, kkrimmer wrote:

    I won't buy another Toytota for some time… the new Ford's look good. GM has some explaining to do (ignition switch deaths).

    I had to replace the water pump in my 42,000 mile Toyota. The guy paying in front of me also had to replace his and a friend with 49,000 on their Camry hybrid had to replace theirs…. When I questioned the service department why I needed it with only 42,000 miles they said "the car is 4 years old" … so I replied "If I buy a car and put it on blocks I'll have to replace the water pump in 4 years?" (my friend has had their second water pump replaced in their Camry at 60,000).

  • Report this Comment On April 06, 2014, at 2:59 PM, parmetta wrote:

    I think that Toyota will win the sales war The Fusion is a nice looking car. Toyota has Ford beat in being a more dependable brand. Don't count The Honda Accord just yet a better looking car than the Camry & just as dependable

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John Rosevear

John Rosevear is the Fool's Senior Auto Specialist. John has been writing about the auto business and investing for over 20 years, and for The Motley Fool since 2007.

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