Family cars: Not sexy, but sellingJuly 12, 2012: 11:24 AM ET
Dowdy family sedans have typically been about as exciting as orthopedic shoes. No longer. Now sales and profits are rolling in.
By Doron Levin, contributor
FORTUNE -- Once lacking in sex appeal, the family car is hot again. With U.S. new vehicle sales up 14.8% through the first six months of the year, midsize family sedans models like the Toyota (TM) Camry, Ford (F) Fusion and Chevrolet (GM) Malibu rose 27%. The category was 37% higher in June.
Midsize family sedans have been marked by the arrival of new entries, notably the Volkswagen Passat, as well as redesigned models like Nissan (NSANY) Altima and Malibu. The Accord and Camry, two of the segment's stars, are back with replenished inventories. And by reducing engine size in some models, automakers have improved their fuel efficiency. Family sedans "have re-established themselves as the U.S.'s bread-and-butter segment," said Jeff Schuster, senior vice president for LMC Automotive, an industry market intelligence company, "but with more emphasis on design and style."
Sedans are being bought by older empty-nesters as well as young, single buyers starting out in their careers. Of course, they are still popular with families with children. The wide span of potential buyers is possibly due to greater attention by automakers to diverse requirements the segment. Nissan's new Altima, for instance, can cost as much as $33,000 with a 3.5-liter V6 engine and all options to as little as $21,931 with a 2.5-liter engine without mats for the cabin or trunk.
The five top sellers for the first half are (in order): Camry, 213,902, up 45%; Accord, 164,141, up 20%; Altima 157,101, up 19%; Malibu, 141,437, up 15%; and Fusion, 136,849, up 4%.
Sales of the Camry and Accord had been hurt by the 2011 earthquake and tsunami that wreaked havoc in Japan and on the production of the two models. The strong year-over-year comparisons reflect the ability of Toyota and Honda to increase production as well as the introduction of a new Camry model. A new Accord is scheduled to debut in the fall.
One of the most closely watched launches this year is the Passat, whose monthly retail sales have been increasing steadily and topped 10,000 in June for the first time. Volkwagen is on a mission to pass Toyota and GM as the world's top automaker in terms of sales by 2018, a goal that requires a big increase in the U.S. where VW has been weak.
Before the new Passat, which has won numerous awards and offers a diesel engine option in addition to conventional gasoline versions, VW didn't contend in the midsize sedan category. Passat is built at a new VW plant in Chattanooga and likely will grow in popularity beyond the 10,000-sales-a-month level.
The Camry is shaking off any safety concerns resulting from an unintended acceleration controversy of two years ago that has proven largely baseless. The car now is touted by Toyota as containing an unusually high percentage of parts produced in the U.S. Almost every Camry sold in the U.S. is built either at the automaker's Georgetown, Ky. plant or one in Lafayette, Ind. – a fact Toyota emphasizes, equating purchases of its cars to a stronger U.S. economy.
The U.S. car market has a long way to go to reach pre-2008 heights. The swift rebound of the family sedan segment is a key portent that vehicle sales are at least moving in the right direction.