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From the Detroit Free Press:

Market challenges mount for Camry

It faces aging buyers, more foreign rivals

April 6, 2006



As Toyota prepares a $230-million Camry assembly line in Lafayette, Ind., the Japanese automaker faces a vexing issue: Who will buy the Camry in five or 10 years?

Camry has outsold every other sedan every year since 1997. But relatively few 25-year-olds today aspire to own the same brand as mom and dad.

"Younger people see the Camry as an older person's car," said auto analyst Art Spinella, who surveys shoppers for carmakers and auto dealers nationwide. "That's really Toyota's core problem."

Landing a plant that will make the nation's best-selling car is regarded as an economic coup in Indiana. It also brings risk. Camry will tie the state industrial economy again to the vagaries of the car market.

As market share receded for Detroit brands Chrysler, Ford and General Motors, Indiana auto-parts plants closed, and layoffs mounted. No longer an upstart, Toyota is the established car brand. Now it's trying to defend reigning sales leader Camry, a favorite of American baby boomers, from upstart foreign rivals.

"In five years, not only will Toyota have Detroit and Honda and Nissan and Volkswagen to contend with, it'll have Hyundai and Kia from South Korea, and Chinese vehicles in the U.S., maybe multiple ones from China," Spinella said. "What market are they all going to be targeting? The midsize sedan market is the place to start."

Toyota announced a contract with Japanese rival Subaru on March 13. The under-used Subaru of Indiana Automotive plant in Lafayette will hire up to 1,000 workers and set aside an assembly line for Camry, beginning in spring 2007.

It would make about 40,000 Camrys that first year for Toyota and up to 100,000 a year by 2009. Toyota's main Camry line will continue full pace at about 400,000 autos a year in Georgetown, Ky.

The four-door Camry is a midsize car, usually priced at $19,000 to $25,000, depending on options.

"Camry has been criticized for bland styling," said Toyota spokesman Jim Wiseman. "We'll restyle the car for 2007. It's a fine line. You don't want to make it so cutting edge it loses the hundreds of thousands of drivers it appeals to."

Analysts point out, however, that Toyota also must lure younger buyers. Camry's typical buyer is 52, almost a decade older than buyers of the Honda Accord and Nissan Altima.

Camry established the Scion line to lure younger buyers. Often Camry buyers trade in used Camrys. Nearly 40% of new Toyota sales involve Toyota trades. That's a sign of high brand loyalty.

Luring young buyers might sound like an unusual problem. But Buick is an example of brand decline. When minivans and SUVs proliferated in the early 1980s, General Motors' Buick division stayed with its sedans. Then a major brand, Buick sold 1 million cars a year, more U.S. cars than Toyota now sells in a year.

Buick's sedan drivers have remained loyal, but Buick's average buyer is now 62. Starved for younger drivers trading up for bigger cars, Buick sales have slumped. Only 282,000 Buicks were sold last year. GM has razed massive Buick City, a 95-year-old manufacturing complex in Flint.

"The difference between what Detroit goes through and what Toyota goes through is that for every single problem Toyota has, they put a team on to fix it," said Spinella. "Detroit pretends it doesn't exist."

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