Automakers in a race for buyers of mid-size family cars
Shoppers looking for family passenger cars could be winners of a war breaking out in the auto industry.
Over the next year, rival automakers are planning to roll out at least four revamped mid-size sedans packed with new features and boasting better fuel economy.
The cars — the Ford Fusion, Chevrolet Malibu, Honda Accord and Nissan Altima — already represent some of the bestselling vehicles of any type in the industry. Analysts say each will intensify the already tough competition in the family car segment.
Car shoppers for once “will have it all — great design, great fuel economy and products with innovation. And if you are an automaker that can’t deliver, you will lose,” said Mike Jackson, chief executive of AutoNation Inc., the nation’s largest car dealer group
The first wave, including the new Fusion and one version of the Accord, were unveiled this week at the North American International Auto Show in Detroit. Both will offer features such as a warning when the car wanders from its lane or when the vehicle is at risk of a front-end collision. The Fusion also comes with a parallel-parking system that calculates the trajectory and steers the car into a parking spot while the driver operates the gas and brake pedals.
These models are reaching the market just after the introduction of redesigns for two other key cars in the category: the Toyota Camry — the bestselling passenger car in the industry — and the Volkswagen Passat.
“There has never been a time in the industry with this type of competition,” said Mark Reuss, president of GM North America.
The vehicles will sell in the mid-$20,000 range, depending on options and engine configurations.
Mid-size family sedans account for about 16% of U.S. auto sales, the auto industry’s largest single segment.
“This is the real bread-and-butter segment for most of the manufacturers,” said Brian Carolin, Nissan North America’s senior vice president for sales and marketing. “For a lot of shoppers, this segment is the entry point for the brand.”
Nissan’s Altima accounted for more than a quarter of the brand’s U.S. sales last year. Carolin called it the company’s “backbone.” He said the new-generation Altima arriving this summer would have the “styling and technology” required to maintain its position.
It didn’t used to be this way.
The Camry and Accord long dominated the category thanks to their reputations for reliability, which for nearly two decades cemented their places as the default choices for family sedan buyers.
But in early 2010, Hyundai launched a remake of its mid-size Sonata. The new version got rave reviews from the automotive press, and sales took off. Hyundai sold 226,000 of them last year and probably could have sold more if it had more U.S. manufacturing capability.
At the same time, Toyota was stumbling through a series of massive recalls that tarnished its image and seemed to break the Japanese lock on the segment it shared with Honda, according to industry analysts. Both companies were rocked again last year by the Japanese earthquake and tsunami, which disrupted their global production and created a shortage of cars.
Toyota and Honda each suffered 7% declines in U.S. sales last year while Chevrolet, Ford, Hyundai, Nissan and Volkswagen posted double-digit gains.
All of this combined to jolt buyers out of old shopping habits and open up to consideration many offerings in the family car segment, said Jeremy Anwyl, vice chairman of auto information company Edmunds.com.
“The only downside for consumers is that they will now have to think harder about their purchase because there are so many good choices,” he said.
Ford’s Fusion has gradually been building a strong following.
Even at the end of its product cycle, the outgoing Fusion sold nearly 250,000 units last year, better than the Accord and good enough for third place in the family car market, after the Camry and Altima.
This represented a transformation for Ford, which previously made its money from the sales of trucks and sport utility vehicles and was considered an also-ran when it came to passenger cars.
The new Fusion unveiled in Detroit could be an even stronger competitor. Ford has juiced the styling, making it more fluid and less boxy — attributes that have helped build sales of its smaller passenger cars.
Ford hopes to capture buyers by offering a range of powertrains, including a gas-sipping 1.6-liter turbocharged engine expected to get about 26 mpg in city driving and 37 on the highway. A hybrid version is expected to reach 47 mpg in city driving and 44 on the highway. Finally, Ford will sell a plug-in electric vehicle that can travel 20 miles on battery power before the gas engine kicks in.
“The fuel economy message will be a phenomenal opportunity for us, and the design will speak for itself,” said Samantha Hoyt, Fusion brand manager.
General Motors Co. moved up the introduction of its new Chevrolet Malibu so it could hit the market before some of these rival models reach showrooms in the second half of the year.
“We have a hole to get it into the market; that’s why I pulled it up,” said Reuss, GM’s president.
The first version of the new-generation Malibu to go on sale has a standard light hybrid system — a small electric boost that pushes mileage to 25 mpg in city driving and 37 on the highway.
Its wheelbase will be shorter but wider than the previous model, and it will have more interior and trunk space. The new Malibu is Chevrolet’s first attempt at producing a global mid-size sedan. It will be sold in about 100 countries on six continents. Later in the year, models with different engine options will be released.
Honda announced at the show that it would offer three engine configurations for its new Accord. There will be an all-new four-cylinder engine that Honda says will deliver more power and better mileage than the current model. It will also offer a six-cylinder engine and a plug-in hybrid that can run for 10 to 15 miles on battery power alone.
The carmaker is also decreasing the length and reducing the weight of the vehicle to improve fuel economy and handling.
With more than half a dozen competent family sedans set to be chasing buyers by the end of this year, manufacturers may have to start discounting more than they typically do with a new model, Anwyl said.
That would represent a turnabout from the current strategy, in which companies have generally been disciplined about not offering huge discounts to get buyers into showrooms.
“All of these manufacturers will have a target for how many of these cars they want to sell, and there might not be enough buyers to make everyone happy,” Anwyl said. “That seems to be a recipe for price competition.”
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