Toyota (NYSE:TM) Camry has been America's most popular midsize sedan for the last 12 years. Though sometimes looked down on by car enthusiasts for being bland, the car has worked wonders for Toyota in the U.S. In the last couple of years, the U.S. auto market woke up from its post-recession slumber, and as buyers demanded new cars, the scramble for market share among automakers reached a fervent pitch. Surprisingly, the "boring" Toyota Camry gave both old rivals and new arrivals a run for their money and stayed put at the top of the sales charts. What's the secret behind the Camry's stupendous success? Let's dig in.
Winning over American buyers wasn't easy
In 1983, Toyota launched the Camry in the U.S. when it retired the aging Corona, which was its ticket to success in the late '60s and '70s. The launch marked the beginning of a legendary rivalry in the midsize market -- between the Toyota Camry and Honda Accord. The Accord had arrived in the U.S. some years earlier and was ruling the popularity charts when Camry appeared.
Camry received a warm welcome as its sturdy build, safety, and quiet-driving comfort struck a chord with American buyers. Enthused by the growing popularity of the car, Toyota decided to build it in the U.S. itself. It set up a huge factory in Georgetown, Kentucky, and in 1988, "made in America" Camrys came to U.S. dealerships for the first time. By 1992, 3 out of every 4 Camry sedans sold in the country came from the Kentucky plant. But it was not until 1997 that Camry became the best-selling car in the U.S. By then, Toyota had figured out the tastes and preferences of American buyers. Camrys became bigger, safer, and more powerful than ever.
In the past 31 years, the car has found a place of pride in 10.3 million U.S. households, and over 6.7 million Camrys are still out on the road.
Silencing critics and competitors alike
The midsize segment is one of the biggest and most hotly contested segments in the U.S. auto industry. Every year, close to 2.4 million midsize cars are sold in the country. Predictably, automakers keep targeting this category with new models, as a big hit could mean annuity-like revenue for years. Despite this, the midsize segment has virtually been a two-horse race between Camry and Accord for decades. The duo have been the "dependable family cars" Americans swear by.
But lately, Camry is feeling the heat from new contestants like the Nissan Altima, Ford Fusion, Hyundai Sonata and others. Last year, it had a shaky start and after the first six months, sales were down 2.9%, while rivals grew sales at a solid pace. Accord sales were up more than 20%, Altima's nearly 7%, and Fusion's close to 18%. It was becoming increasingly clear that the No. 1 spot was becoming elusive. The sporty looks of new models wooed buyers away from Camry and the result was visible in the sales tally.
Toyota took immediate action to prevent the sales slide and offered higher incentives. In August, incentives were $2,560 per Camry, about $367 more than the industry average. The move paid off, and sales momentum returned once again in the second half of the year. Finally, Camry ended the year with more than 400,000 in sales, miles ahead of competitors.
The 2015 Camry
2014 has been fruitful for the Camry so far, with sales of 306,471 units through August, 6.7% higher than during the same period last year. In comparison, the Accord has sold 271,426 units, the Altima 235,260, and the Fusion 218,892. But Toyota doesn't want to take any chances as Camry is the company's best-selling car in the U.S., accounting for nearly one-fifth of total sales. The brand-new 2015 Camry that arrives at dealerships later in the month is more stylish than the earlier models. On its website, Toyota claims, "From now on, people won't just be talking about all that technology, safety, and quality engineering. They'll be too busy asking 'Who was that?'"
The new model is coming at a time when the midsize segment is buzzing, with family sedan sales rising 9.5% in August. For one thing, it's time for kids to go back to school, and family cars are in demand. Second, most automakers are giving heavy incentives on small and midsize cars to counter the growing popularity of crossovers and trucks. Toyota itself is offering an interest-free five-year loan on the Camry sedan. Industrywide discounts on midsize cars are up 4% to $2,344.
Edmunds analyst Jessica Caldwell opines, "It's definitely a good time to buy a midsize car." She says that with all midsize cars looking good and performing well, price is becoming the only differentiator. So, for all the new styling, equipment, and features, Toyota has kept the Camry pricing close to that of the outgoing model.
Lucky No. 13?
The Camry was built with the U.S. market in mind, and during the last three decades, Toyota has refined the car to suit the preferences of American buyers. The 2015 model is another big leap for the iconic car as it takes on a more stylish incarnation. That, together with the competitive pricing, puts the car in a sweet spot and makes it a strong contender for winning the sales race for the 13th consecutive year.
ICRA Online and Eshna Basu have no position in any stocks mentioned. The Motley Fool recommends and owns shares of Ford and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.