The Toyota Camry has enjoyed complete domination of the passenger car market. You can find many Camry’s on the blacktop among the many cars in Louisville. It has been the top-selling passenger car in all the land and now its historical reign may be in jeopardy due to the popularity of its competitors. Toyota is also feeling pressure due to a strengthening currency and Thailand’s recent floods.
Toyota’s stock has dropped nearly 19 percent year-to-date. It seems as though stockholders have become aware of the pressures discussed in this article recently published by the Courier-Journal:
Toyota Motor Corp. was already counting on the revamped Camry to spark a U.S. sales rally. The carmaker’s flagship model is now under additional pressure as a stronger currency and Thailand’s floods cut into profits.
The company has reduced its earnings forecast by more than 50 percent for the year ending in March, blaming a slump in production after Thailand’s worst floods in almost 70 years.
The 2012 Camry, which primarily is assembled in Georgetown, Ky., was released in October with a goal of boosting sales hurt by Japan’s earthquake and tsunami and retaining its title as the top-selling U.S. passenger car.
“There’s a lot of pressure on that car,” said Maryann Keller, an auto analyst and president at Maryann Keller & Associates. “It’s been reviewed as being competitive within the midsize sedan segment, but not that much better or worse than competitors. Right now, the perceived design leader is Hyundai’s Sonata, and Kia’s Optima is also doing well.”
While Toyota is set to lose its ranking as the world’s largest automaker this year to General Motors Co., the Toyota City, Japan-based company has said it’s determined to keep Camry the best-selling car in the U.S., a spot held for 13 of the past 14 years.
Rebounding from parts shortages and assembly disruptions may prove easier than overcoming rivals.
“Camry bears the lion’s share of whether they succeed in recovering both market share and profitability” in the U.S., said Larry Dominique, executive vice president of TrueCar.com and former head of Nissan Motor Co.’s North American product planning. “The reality is the best way to gain market share and profitability is new product, and Camry is their biggest.”
‘Pricing power’
The success of Hyundai Motor Co.’s Sonata and Kia Motors Corp.’s Optima as well as Ford Motor Co.’s Fusion, means Toyota no longer has the ability to price Camry above segment competitors, Keller said.
“The problem isn’t so much how many units of Camry they sell, but the margin of each vehicle,” she said. “They don’t have the kind of pricing power they once enjoyed.”
U.S. drivers bought 23,440 Camrys in November, 15,668 Sonatas and 9,533 Optimas.
While Camry remains the best-selling car in 2011, even after production delays helped cut sales 7.3 percent so far this year, Sonata volume is up 15 percent and Optima deliveries more than tripled from last year.
Toyota doesn’t disclose its profit for the Camry. Neither Keller nor Efraim Levy, a New York-based equity analyst for S&P Capital IQ, who rates Toyota’s American depositary receipts “hold,” had estimates for how much Toyota earns from the car.
Camry’s importance
“The success of the Camry is very important to Toyota,” Levy said. “It’s similar to Ford’s F-150 pickup, since in each case it’s the single biggest source of sales volume.”
Toyota has set a goal of selling at least 360,000 Camrys in the U.S. in 2012. The company has sold 275,004 in the first 11 months of 2011, leading Nissan’s Altima’s 243,005, which has surpassed Honda Motor Co.’s Accord, at 217,958, for the No. 2 selling car.
The best-selling midsize sedans of U.S. automakers are Ford’s Fusion at 226,445 and GM’s Chevrolet Chevrolet Malibu at 191,774. GM’s top-selling car is the Cruze compact at 215,057.
“We have been increasing the volume of shipments to our dealers since we began production in September,” Steve Curtis, a spokesman for the company’s U.S. sales unit. “We’ll get as many to customers as possible.”
Camrys for sale in North America are built at Toyota’s plant in Georgetown, and under contract at affiliate Fuji Heavy Industries Ltd.’s Subaru plant in Lafayette, Ind.
After a quake- and tsunami-related production slowdown in North America that lasted more than five months, Toyota has said it’s now working to build up inventory of Camry and other models as quickly as possible.
‘Full production’
“We are running full production on Camry lines as we continue to replenish inventory and meet market demand,” said Mike Goss, a spokesman for the company’s manufacturing unit, without elaborating.
Toyota’s best year for Camry was 473,108 sold in 2007. Between its Kentucky plant and the Subaru factory, the company has said it can produce about 500,000 of the cars.
The automaker estimates that more than 6.8 million Camry models are on the road in the U.S., the largest owner base of any midsize sedan.
Toyota touts the latest version of Camry as more fuel-efficient than the previous version, with a better ride and handling. The car has added safety features and last week received a top score in federal crash tests.
The new Camry’s exterior has squared off corners compared with the earlier version’s rounder edges. The redesigned model has a roomier rear seat and bigger trunk.
‘Extra scrutiny’
It’s essential for the new car to be seen by consumers as safe and high-quality, following the company’s recalls of Camry and other models for flaws linked to unintended acceleration, said Eric Noble, president of the Car Lab, an industry consultant in Orange, Calif.
“This model will receive extra scrutiny,” Noble said. “To much of America, Toyota is the Camry. What Toyota needs is at least an acceptable launch out of this car as a signal to the North American public that hey, we’re all right again.’”
Since sales began in October, most buyers of the new model are previous owners of Camrys and other Toyota models, Jim Lentz, president of Toyota’s U.S. sales unit, said in an interview last month.
Sales of Camry should rebound to about 30,000 units a month “sometime in February or March,” Lentz said. The car typically sold at that level or higher before the recalls and this year’s production slowdown.
Improvements
Camry sales were shrinking prior to this year’s natural disasters as Hyundai, Kia, Ford and GM raised competition with features matching or topping those of Camry. The latest Camry has an enlarged cabin and moves ahead of Accord, Sonata, Optima, Altima, Fusion and the Chevy Malibu with the highest fuel-economy rating among four-cylinder midsize sedans, at 25 miles per gallon of gas in city driving, 35 mpg highway.
The 2012 Camry Hybrid, whose 41 mpg average tops Hyundai’s Sonata Hybrid at 37 mpg and the Fusion Hybrid at 39, is the highest among midsize sedans, according to Environmental Protection Agency data.
The price of a base model 4-cylinder engine 2012 Camry LE with an automatic transmission was trimmed about $200 to $22,500. That compares with $23,095 for a Sonata GLS model and $21,750 for an Optima LX.
Component shortages caused by Thailand’s floods disrupted production for Japanese automakers. Toyota said the floods will cut earnings by $1.55 billion.
I wonder if Louisvillians have noticed a shift in the number of new Toyotas Camrys being purchased in comparison to the number of Kia Optimas, Hyundai Sonatas and the Ford Fusions being purchased? The Camry is a solidly built car, but I would imagine that the current economic climate will push Louisville car buyers to look more seriously at the Optima and Sonata (especially considering that their designs have recently been dramatically improved).
The cars mentioned in this article and respective Louisville car dealers
The Kia Optima
Louisville Kia car dealers:
The Kia Store
5325 Preston Highway Louisville, KY 40213
Website: http://www.kiastore.com
Telephone: 888-214-1809
Kia Store East
7301 New LaGrange Rd Louisville, KY 40222
Website: http://www.kiastoreeast.com
Telephone: 888-208-8387
Kia Store Clarksville
826 E Lewis & Clark Pkwy Clarksville, IN, 47129
Website: http://www.kiastoreclarksville.com
Telephone: 866-545-2429
Kia Store Etown
1501 N. Dixie Hwy Elizabethtown, KY 42701
Website: http://www.kiastoreetown.com
Telephone: 888-933-9544
The Toyota Camry
Louisville Toyota dealers
Toyota of Louisville
6514 Dixie Highway Louisville, KY 40258
Website: http://www.toyotaoflouisville.com/
Telephone: 888-334-8899 (sales)
Oxmoor Toyota
8003 Shelbyville Road Louisville, KY 40222
Website: http://www.oxmoortoyota.com
Telephone: 888-471-8170
The Hyundai Sonata
Louisville Hyundai dealers
Hyundai of Louisville
6633 Dixie Highway Louisville, KY 40258
Website: http://www.hyundaioflouisville.com
Telephone: 888-820-9572
Bales Hyundai
630 Broadway
Jeffersonville, IN 47130
Website: http://www.baleshyundai.com/
Telephone: (866) 761-9954
The Ford Fusion
Louisville Hyundai dealers
Town and Country Ford
6015 Preston Highway Louisville, KY 40219
Website: http://www.fordlouisville.com/
Telephone: 502-961-8421
