How much is it worth sacrificing to keep the title of Number One?
The Toyota Camry has been the top selling car in the United States for 11 years. That’s partly due to the car’s reputation for reliability, and partly because buyers know the car will be worth a lot when it comes time to sell or trade in.
Toyota has never had to lay on heavy incentives to sell the car because people paid whatever they needed to in order to get one.
Toyota, though, is within shouting distance of seeing its number one ranking go away. Through May of this year, Camry sales are off 10,000 units from last year, as rivals Accord, Altima and Fusion have all seen increases.
There are two choices for the giant Japanese automaker:
1. Accept the fact that the number one rank will be ceded, and continue letting the cars demand whatever prices they can get.
2. Discount the prices and offer incentives in order to move more metal and keep the top ranking.
The first option would keep resale values on the Camry high, while the second would cause the legendary Camry residuals to fall off a cliff.
Option two it is.
Toyota Division General Manager Bill Fay wrote in an e-mail to Automotive News,
We will do what is necessary to get the vehicle into the hands of new and loyal customers. Incentives on Camry will remain as competitive as they need to be.
That’s corporate-speak for ‘we will discount these cars and sell as many fleet vehicles as we can to remain number one.’
What is Toyota thinking? Once the mass-incentives kick in, it won’t be long before the Camry has the same value problem that GM has with the Malibu.
Another quote from the Automotive News story:
But some Toyota insiders worry that continued incentives and fleet deals could put the Camry’s values into a downward spiral. They say sales meetings often revolve around the potential trade-offs of the Camry ceding its lead in order to preserve its residual values. If incentives and fleet sales are already this high, some insiders ask, what will happen in two years, when the Camry is closer to the end of its life cycle?
Here’s what will happen: The Camry will become a used car bargain, while the likes of Fusion, Altima and Accord enjoy the fruits of high long-term value.
Do you think Toyota is making the right choice to offer heavy incentives on the Camry to keep it number one in sales?