April 1, 2013

Competition shakes up car market

Automakers offering sleek designs and luxury features have cut into the sales of the Camry and Accord.

The Associated Press

(Continued from page 1)

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A Hyundai Sonata is seen outside a Hyundai car dealership last October in Des Plaines, Ill. For nearly two decades, the Toyota Camry and the Honda Accord have ruled the midsized car market. But now the dominance is starting to slip.

The Associated Press

"It just seems like everyone and their mom has one," she said of the Camry. "There was nothing exciting about it."

Gates, 37, who works for a service that helps people having trouble paying their mortgages, is at an age where people typically would buy a Camry or Accord. She says her pearl-white 2013 Fusion turns heads. "It's just absolutely gorgeous," she said.

That wasn't a term associated with midsize cars until Hyundai remade the Sonata in April 2010. The hard angles were gone. Car reviewers said it had a sculpted exterior that gave the appearance of a car in motion even when parked. Sales rose 15 percent by the end of 2011.

But Sonata's numbers haven't been quite as pretty lately. Sales were off 8 percent in February compared with the same month a year earlier, and have declined in five of the past seven months. The reason: Designs in the midsize market are changing so fast that analysts say the Sonata now seems dated. And Altima sales fell 16 percent last month, even though a brand-new design came out last summer.

"The competition is so fierce," said Jesse Toprak, senior analyst for automotive pricing site TrueCar.com. "It forces automakers into much more frequent updates."

Automakers used to redesign cars every six or seven years and update them every three or four. But in the midsize segment, that's changing to redesigns every three or four years and updates every other year, Toprak said.

General Motors, for instance, is freshening the slow-selling Chevrolet Malibu for 2014, even though it was redesigned last year. The update changes the look in the front and back. The car's front grille, for instance, gets three chrome-accented horizontal bars rather than one solid bar, matching newer Chevrolet vehicles. GM also addresses criticism of a cramped back seat.

Malibu sales rose just 3 percent in 2012. GM lowered the base price by $300 to $770 depending on model and raised discounts on the car in February.

Since slicker styling is now commonplace, price is a bigger consideration for buyers, Toprak said. And that means better deals for consumers, particularly on older models.

Carmakers are either dropping the base price or ramping up incentives. Average sales prices fell from January to February on seven of the segment's 10 top-selling vehicles, according to the Edmunds.com auto website. Discounts also rose on seven of the 10 top sellers. The average price dropped by $131, to $25,729.

Camry's price went up slightly between January and February, but in the past year, it has fallen $136, to $24,211. The Camry's average price is about $1,000 less than the Accord and Altima and $2,000 less than the Fusion. In late February, Toyota began offering no-interest financing on the 2013 Camry for 60 months.

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