0% financing for 60 months. Up to $2,000 in dealer rebates, most of which winds up going into customers’ pockets. Rental lines bulging with high-trim sedans as dealers desperately attempt to shovel away product and make room for truckloads of new arrivals. Savvy shoppers are shaving three, four, and even five grand off of MSRP as average transaction prices land in the basement for the class. Despite massive inflows of manufacturer cash, sales volume stagnates and declines as competitors grab more and more market share. All in merely the second model year of Toyota’s marquee product, a legendary nameplate with a (supposedly) loyal customer base and years of carefully-crafted reputation. What, pray tell, is going on here?
Of course, the midsize sedan wars are no mystery to industry watchers and TTAC readers. Tim Cain’s latest update on the segment helped expose the extent of the bloodletting. For the purposes of this story, the most important takeaway from Tim’s article is just how hollow the title of “best-selling car in America” has become. That moniker now belongs to a single car in a single segment where the largest player has roughly 15% share. Despite the meaninglessness of the crown, Toyota shows no signs of stopping the discount war and forcing volume. Perhaps prodded by a belligerent Nissan’s price-cutting regimen, transaction prices for the Camry are trending ever lower. It’s difficult to tell exactly who is letting their wares go for the lowest price, but if Toyota isn’t at the very bottom, it’s close. Lest I be accused of selective myopia, it’s true that incentive spending is up across the board in this segment, and that many other manufacturers are offering generous sweeteners on their midsizers. In any case, an absolute ranking of incentive spending in a shallow pissing match is not what I’m after here. In the overall game for the heart of the segment, we’re seeing radical market realignment. To stay on top, Toyota is choosing to use the same kind of techniques to maintain sales levels that many of its competitors were once lambasted for utilizing. Let’s think about what that means for a minute.
We are now in the position to credibly compare Toyota’s incentive spending, fleet dumping, and overproduction to Nissan and GM, to say nothing of Ford. On a two-year-old model, no less: the car that has defined Toyota’s legacy in the US for the better part of two decades. Not some outdated and soon-to-be-replaced relic like the Corolla, but a nearly-new car with a storied history and an impeccable pedigree. A car that supposedly sold itself until a very short time ago barely moves off dealer lots without a pile of cash and some of the most desperate-sounding marketing in recent memory. (Cars.com counted 38,844 Camrys for sale nationwide at last glance, compared to about half as many Fusions). Toyota is supposed to be above this sort of nonsense, right?
The Toyota dealer used to be the hallowed ground where you tread lightly and wrote whatever size check the dealer demanded. You were humbled to drive as superlative a machine as a ’92 Camry off the lot, at any price. That market softened with time, but the general pattern stayed the same. Toyota asked, and you handed over the money. As the domestic and second-tier import dealers engaged in progressively wilder fiscal gyrations to move the metal, Toyotas quietly slipped off the lot at or near MSRP. Not a ridiculously large amount of money; plenty of normal proles brought some of the Toyota magic home for themselves, after all. But it was a sharp distinction that became a refrain for the brand’s defenders: People pay more for Toyotas because they’re worth it. They don’t have to be pushed or prodded with cash on the hood and exotic financing because the cars are too good for that. And that’s how it went for years.
Fast forward two decades, and those halcyon days are gone. Ford is busy hoovering up the top end of the market, while Honda, Nissan, and Hyundai-Kia cut out the middle. Toyota has no chance of beating Chrysler and GM in the deep-discount game. Mazda, VW and Subaru are still stuck on the fringes that Toyota never cared about. The Camry can’t be a car for everybody, but increasingly it looks like a car for nobody. For years, we were led to believe that neatly arranged rows of little red circles were what sold cars in this segment. For years, Toyota racked them up like no one else, Honda included. Today Toyota has just as many little black circles as it ever has, but now it finds itself adrift amongst a sea of competitors with their own paper rag recommendations and their own unique, appreciable traits. Toyota seems completely flummoxed by this; it’s as if there was no contingency plan should the competition ever become decent. The response has been reminiscent of the bad old days of the domestic industry, except that in Toyota’s case there’s less of an excuse for blatant overproduction.
In short, we’ve seen the Camry leave the orbit of Planet Toyota and come crashing down to Planet Earth instead: a place where price matters, styling sells, and quality, reliability, and fuel efficiency can be sourced from a wide range of sellers. Most of all, it’s a planet where legacy matters little, as the new generation of car buyers grows up not knowing tales of brand-new cars that don’t start, thirty-thousand-mile major mechanical failures, and rust that destroys in five years. They’re ready to indulge their automotive fantasies in a way their conservative parents would never have dared; they can be comfortable knowing that even if they buy the very worst new car on the market, they won’t suffer too badly for it. The inevitable retort is that every one of these new automotive rebels will be horribly burned by their collective ownership experiences and that they’ll be back in the fold in no time. Maybe that will be the case, but I wouldn’t bet on it. That’s not what happened with those crummy little imports in the 70’s, it’s not what happened after Hyundai brought out the Excel, and it hasn’t stopped VW from mounting a serious comeback effort despite that brand’s well-known issues. Lingering quality problems haven’t prevented the German luxury brands from going absolutely ham on the American market either; meanwhile, Lexus and Acura seem increasingly moribund.
This Camry isn’t a bad car; far from it. If you want one, I wouldn’t tell you no, especially not when they’re available at such fabulously low prices. But forget the Dart and forget the Malibu: the 2012 Camry is the most important flubbed launch in recent memory. It might be the most important flubbed launch since the X-cars. And it’s for this reason and this reason alone: this Camry didn’t stop Planet Toyota from becoming just another rock in a big solar system. The Camry came out of the gate as a completely solid player, a car with no major faults that was unlikely to disappoint its supposedly loyal ownership base. Yet, for whatever reason, more and more customers in the United States started saying no. They continued to say no even as discounts piled on and marketers wringed their hands in desperation. Suddenly, a realization: competence was not a superlative trait anymore. Their competitors over at Honda were busy figuring this out too, as they dealt with their own messy 2012 release. The entire superstructure on which the Camry was positioned came crashing down as more than one competitor started making decent family sedans. Some will probably say the rot started earlier, with the unloved XV40 platform and a swelling crop of credible alternatives. But the next generation was the chance to reverse the decline and sweep out the fleet sales and incentives. It never materialized, and now here we are.
This Camry has shown without a doubt that the sainted days of Toyota in the United States are over. Nobody is “beyond the market” anymore; the man on the street wants a deal, and he’s not willing to pay extra for Product X if it’s not immediately apparent why it’s superior to Product Y. Was this an avoidable situation, if the Camry had just a little more secret Toyota sauce on it? Maybe, but the response thus far has been anything but ideal. What happens when the previously unshakeable resale values start to go down the tubes as well? Toyota must learn to live in the new reality: Camry as yet another competent family sedan in a sea of competent family sedans. Now it’s Honda’s turn to prove whether or not they can maintain their own halo, so recently jarred by the 2012 Civic and now riding on the outcome of the 2013 Accord. Give it a year or two; the news from Planet Honda might be more of the same.