Market insight: Medium rare success

THE medium-car segment looks set to “do a Bradbury” and skate past the once-dominant large-car segment in 2012 if the big Aussie cars continue their downward trajectory.

Already overtaken by the increasingly popular small and light cars – not to mention compact SUVs and 4x4 utes – the large sedan brigade now faces the ignominy of being passed by one of the market’s great underperformers, the medium segment.

So far this year, medium cars have accounted for 7.3 per cent of the total Australian market, while large cars are clinging to 8.0 per cent. About a decade ago, the mid-sizers had 5.2 per cent share and the large cars a market-leading 24.6 per cent.

Even though medium car sales volumes are down 10 per cent this year – attributable to a fall in sales of the strike-starved and earthquake-dented Toyota Camry in its run-out phase – large cars are leading the race to the bottom, down 20.3 per cent to the end of August.

With an all-new Toyota Camry in the wings for a late-2011 launch – provided a pay dispute at Toyota’s strike-hit Altona plant in Melbourne is settled some time soon – and a couple of hot imports such as the new Holden Malibu and new-generation Mazda6 set to arrive in late 2012, things are looking a little more positive for medium-car sales volumes that have struggled along, especially since the demise of the locally made Mitsubishi Magna/380.

The Camry – now the only locally made medium car – remains the dominant force in the segment with a 32 per cent slice of the action, mainly by virtue of its massive fleet sales.

From top: Chevrolet Malibu, Ford Mondeo, Hyundai i45, Mazda6, Kia Optima.

Three out of every four Camrys go to business, government or rental companies – a situation that is unlikely to change dramatically with the arrival of the 2012 seventh-generation model that might be all-new mechanically but will still be wrapped in the conservative theme of previous generations.

Imported mid-sized rivals might have some spunkier sheetmetal, but they struggle to make it into double-figure share percentages, in many cases because importers are unwilling to go toe-to-toe with Toyota for a bigger slice of the less-profitable fleet business.

Exceptions are Ford and Hyundai, which unload more than 80 per cent of their Mondeo and i45 stock into the fleet market – an even greater percentage than Toyota.

In the first half of this year, just 12.8 per cent of Mondeo sales were made to private buyers, although these figures do not include so-called user-chooser business buyers using facilities such as novated leases.

Mondeo sales are up 42.9 per cent this year, partly because of happy exchange rates with the euro that have enabled Ford’s push in the price-sensitive fleet market, but also because of the arrival of the new, efficient EcoBoost turbocharged petrol engine in the Belgian-made vehicle.

These initiatives have moved the Blue Oval’s mid-sizer into second place in the segment behind the Camry and ahead of the former runner-up, the Mazda6 – a mechanical first-cousin of the Mondeo.

Mazda prides itself on its private-buyer base for all its models and this is reflected in its private-buyer share of more than 67 per cent – second only to the Honda Accord Euro’s 69 per cent among the top 10 performers in the segment.

This year, Mazda6 sales are down 30 per cent, partly because the car is getting a little long in the tooth and partly because Mazda makes a priority of protecting its resale values by resisting dramatic price gutting just to hold share.

In the first half of this year, just two Mazda6s were sold to bargain-hunting rental companies, compared with 1221 Camrys and 726 Hyundai i45s.

An all-new Mazda6 is believed to be about a year away and the Japanese company has already indicated the car will be a quantum leap over the current vehicle, getting a full suite of its new SkyActiv engine, transmission, chassis and body technologies.

The technology will include a super-efficient Sky-D diesel engine that is said to consume an average of just 4.2 litres per 100km – a figure that will make life difficult for the new Hybrid Camry due in the first quarter of next year.

More threatening to Camry, though, is the impending arrival of General Motors’ Malibu under Holden badges, probably in the last quarter of 2012.

The Korean-built sedan – mounted on the same GM Epsilon II platform as the Opel Insignia – will be armed with an all-new 2.5-litre petrol engine from the GM stable.

The front-drive car is theoretically a replacement for the unloved Holden (Daewoo) Epica, but GM has aimed the new car squarely at Camry, and it will be priced to suit.

Unfortunately for Holden, the Malibu is likely to take a chunk out of Commodore sales as well, as has the smaller, locally made Cruze, but that is a price Holden is willing to suffer as it goes after the middle ground occupied by Camry.

Although Holden has not said as much, its goal will be to take the number-one spot in the small (Cruze), medium (Malibu) and large (Commodore) passenger car segments, while also making inroads with its Barina and Barina Spark (light), Captiva (SUV) and all-new Colorado (ute).

Hyundai is set to extend its mid-car reach with the addition of the i40 wagon alongside the related i45 sedan in the next few weeks.

Fellow Korean Kia, which has been on rations of its well-regarded Optima, also could emerge as a major player in 2012.

The combined energy of all these players in the medium segment is likely to give the segment its moment in the sun over the next two years.

The question is whether the large cars have enough left in their arsenal to go with them.