Midsize cars: an increasingly dominant segment

05 Sep 2012 Tom Libby

If you live in the Detroit metropolitan area, you may have noticed that almost every other car on the road seems to be a Ford Fusion or Chevrolet Malibu (if you're on one of the coasts, the same could be said of the Camry or Accord). In fact, there is a boom in sales of midsize cars. In the first six months of this year, 18% of all new vehicle sales have been non-luxury midsize cars. This is more than two points higher than the number two segment (non-luxury compact cars) and the first time in at least six years that one segment has accounted for 18% or more of the industry at the mid-point of the year (Polk splits the U.S. light vehicle industry into 32 segments).

Two reasons for this growth stand out. First, the segment is going through a transformation as every major entry has recently been redesigned or is about to be. The Passat was redesigned (with production moving to the U.S.) and repositioned based on price about a year ago and the Camry soon followed. A redesigned Malibu is being launched in phases with the first version now on the market and the others soon to follow. A new Altima is currently being launched and a new, widely-praised Fusion comes to dealers this fall. Next year, Chrysler will bring Alpha-based midsize products to market as well. Most if not all of these products are core, high-volume models for their respective OEMs, so their launches have been heavily promoted. With all of this product activity, there have been few losers. In fact, only four of the 18 midsize cars have lost share this year and their combined decline has been just .27% of the market. All the other models have gained ground, propelling the segment's exceptional growth.

Trended Share of Industry for Non-Luxury Midsize Cars

A second driver of segment growth is the relatively high fuel economy of the vehicles, a clear benefit in today's $4+ per gallon landscape. All 18 non-luxury midsize cars are available with a four-cylinder engine, while no large sedan (Taurus, Impala, 300, etc.) has offered this powertrain to date (for the 2013 model year, the Taurus will offer a four-cylinder engine for the first time). Seven midsize cars are available with a hybrid or diesel engine versus none of the large sedans. The fuel-efficient powertrains in midsize cars frequently provide gas mileage competitive with that of smaller cars including highway mileage in the low 40s.

There have been at least three victims of the midsize car segment's success. The large car portion of the industry has plummeted almost four percentage points over the past five years to just 3.76%, while midsize SUVs have lost close to three points and midsize vans more than a point. (Midsize cars have not been the only winner; midsize crossovers have gained more than three points as well.)

The steady cadence of redesigns in the midsize category does not slow down in the future. As mentioned, next year Chrysler launches redesigned midsize Chrysler and Dodge products. Also next year, Mazda brings a new Mazda6 to market, the Optima gets a facelift and an Altima coupe arrives. In 2014 and 2015, the Sonata, Lacrosse and Legacy all get redesigned. With all this activity, Polk forecasts the segment will continue to capture 15% or more of the industry for the foreseeable future.

Posted by Tom Libby, Lead Analyst, North American Forecasting, Polk (09.06.2012)


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