How Toyota Motor Corporation Will Fight Back Against Ford's Fusion

Toyota is set to unveil a big overhaul for the Camry, and that could be a big deal.

John Rosevear
John Rosevear
Mar 31, 2014 at 8:45PM

The current Toyota Camry has received good reviews, but it has lost market share as rivals have upped their games. Toyota has hinted that the Camry is about to receive a major overhaul. Photo credit: Toyota.

Most critics agree that Toyota's (NYSE:TM) current Camry model is a fine car. Like its predecessors, it delivers pretty much what we've come to expect from a Toyota: quality, value, and reliability in an efficient if unexciting package.

For years, that was enough to make the Camry America's best-selling car. But times have changed. The Camry is still good, but the competition is a lot better than it used to be -- and Toyota's midsize flagship has lost considerable market share over the last year.

But Toyota looks set to fight back. As Fool contributor John Rosevear explains in this short video, Toyota is hinting that it will reveal a substantially overhauled Camry in just a few weeks -- one that it hopes will leapfrog the Camry ahead of Ford's (NYSE:F) hot Fusion and other much-improved rivals.

A transcript of the video is below.

John Rosevear: Hey Fools, it's John Rosevear, senior auto analyst for I don't know about you, but I'm definitely looking forward to the media days at the New York International Auto Show, which kicks off on April . I'll be there with my Foolish colleague Rex Moore, reporting right from the auto show floor on all of the important debuts, and we're getting word that one of the most important events at the show might be Toyota's.

Toyota is expected to show off a refreshed version of the Camry at the show.

Now, it's not all-new, it's just refreshed. Generally, about halfway or maybe two-thirds of the way through a model's planned life cycle, automakers will do what's called a "midcycle refresh," or MCR. Typically we see an updated grill design, maybe some changes to the interior, maybe a new engine or a revised one, but not huge changes, just some things to give the model a boost in its competitiveness as it ages, to make it seem fresher.

But Toyota says that its update of the Camry, and I quote, "will challenge conventional expectations of a mid-cycle model change." So they've clearly got something a little more dramatic planned, and that's not really a surprise because the Camry has been losing market share here in the U.S., and that's a big deal because it's Toyota's biggest seller here.

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That's not because the current Camry is bad. It's not, in fact it's quite good, pretty much what you'd expect.

But the thing is, Toyota's competitors have all upped their games. The current Honda (NYSE:HMC) Accord is very nice, Ford's Fusion has been huge, in fact many critics say the Fusion has made the Camry seem boring, and Nissan's (NASDAQOTH:NSANY) Altima has been very strong -- and Nissan has been aggressively pushing it, with price cuts and incentives and so forth to try to steal some thunder from Toyota.

The Kia Optima and the Mazda6 also gained market share from the Camry last year, and the Nissan Altima has actually outsold the Camry in the first two months of 2014 here in the U.S. But Toyota says that the Camry will remain the top-selling car in the U.S. in 2014, so clearly they're planning to go to bat for it.

Now, there's a whole lot that Toyota can do to fight back here. The shift in exchange rates between the dollar and the yen has meant that Toyota's profits per car sold here are much bigger in yen terms, they have some room to cut prices or boost incentives if they want. And of course Toyota has plenty of money in the bank right now and they could really get aggressive on pricing if they wanted to.

Toyota also has the manufacturing capacity to really crank things up. Remember last year Ford's Fusion factory actually got maxed out, they had to add another assembly line in Michigan, well let's just say Toyota isn't in danger of having that problem.  So we will be at Toyota's event when it shows off the refreshed Camry, we'll find out what they're planning, and we'll have video and commentary for you right from the show floor. Thanks for watching.

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