Boy, it sure is getting crowded in the mid-size sedan segment, especially in the second tier of players. The Kia Optima, Chrysler 200 and VW Passat alone combined to raise their sales volume by more than 20,000 units last month as compared to November 2010—the other six mainstream-ish entries only accounted for an extra 5,024 sales. It’s a trend that, if it continues, could have a major impact on one of the most important markets in the industry.
A Sea Change in the Mid-size Segment
During the past few years, mid-size sedans have become the “go to” choice for a growing number of buyers, and the result has been some pretty heady sales numbers—for cars anyway. Despite a challenging mix of both production and perception issues, the leader of the pack, the Toyota Camry, has been above the 30,000-sales mark three times this year, and the Honda Accord surpassed that point once. Those numbers are further bolstered by multiple 20,000-unit months from all of the rest of the high-volume mid-sizers as well, including the Chevy Malibu, Ford Fusion, Nissan Altima and Hyundai Sonata.
The volume difference between those six vehicles and the recent upstarts has been huge, though. The 2010 high points for the other threesome under discussion were as follows: Optima—3,633 sales; 200/Sebring—4,651 sales; and Passat—1,995 sales. But it’s been a very different story in 2011.
That trio of vehicles underwent significant changes post-2010, with the Optima and Passat getting all-new, next-gen models and the 200 receiving a fairly extensive reworking of its own. At the same time, the Japanese Big Three had to deal with this spring’s natural disasters in Japan, and one of them, Honda, had its problems exacerbated by widespread flooding in Thailand. These factors created a window of opportunity in the midsize segment that the Optima, Passat and 200 may be able to leave propped open for a long time to come.
Tracking the Ups and Downs
A look at the numbers for the past year is highly informative, letting us see exactly when those newer models began impacting the marketplace. Optima sales jumped by 2,000 units between February and March, the 200 added more than 4,700 sales during the same period, and the Passat, due to its extremely low 2010 sales, shows two major jumps. The Volkswagen went from 200 sales in June to nearly 1,200 in July, dipped to 314 deliveries in August, then began leveraging increased production of the 2012 model to move to 3,176 units in September. At this stage in the ol’ ballgame, the three have had time to establish themselves relatively well in the marketplace, and they are putting up some spectacular growth rates, too.
Last month, Passat sales were up by 1,509 percent, the Optima had improved deliveries by 569 percent and the 200 benefitted from a robust 480 percent leap forward. And this is where it gets interesting: the growth advantage for the new threesome trumps that of the traditional top six by about as much as the large-volume six had bested the other three last year. However, there was another big break between the Fusion, Altima, Sonata and Camry, all of which increased November sales from between 11.7 and 13 percent, and the Malibu and Accord, which slipped 11.8 and 14.5 percent, respectively.
Thus, we have a situation in which sales of the nine most popular vehicles in the mid-size segment have grown by 25,453 units on a year-over-year basis, representing a 24.8 percent increase. But the Optima, Passat and 200—all by themselves—accounted for 20,429 of those sales. In other words, more than 80 percent of the growth among the mainstream mid-sizers came from just three cars.
(Note: I’m obviously leaving the Dodge Avenger out of the equation here; the 200’s sibling sort of struck a balance between the big six sedans and the three rising stars, with a November increase of more than 101 percent on sales of 5,643 units.)
Peering into the Crystal Ball
Especially based on the November sales results, and with both the Accord and all-new Camry at something close to full production, a couple of things seem clear. First, the Malibu and the Accord appear to be the hardest hit by the up-and-comers, and I’m seeing some underlying weakness in the Sonata as well. The latter’s monthly sales were well above 20,000 units in both July and August, a bit above 18,000 units in September and October, and down to 15,668 in November.
The Camry, Altima and Fusion are handling the changing landscape fairly well, with recent sales essentially unaffected by the improvements at Volkswagen, Kia and Chrysler. However, it’s unlikely we’ll see 30,000 monthly sales out of the Camry (or Accord) anytime soon - the new wave of mid-sizers and their phenomenal surge in growth will see to that.
But for the same basic reason—moderate sales growth overall in the segment—the ceilings for the Optima, 200 and Passat will be limited unless they can start attracting hardcore customers from the other entries. Which could make next year the War of 2012 in the mid-size segment.
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