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Family car demand grows behind better deals, fuel economy

Family cars, including the 2012 Toyota Camry pictured

Family cars, including the 2012 Toyota Camry pictured above, amounted to a massive 2.3 million new-car sales in 2012, up 24.8 percent versus 2011. Credit: Toyota

Jimmy Drew's car shopping list would make you think he was looking for a small SUV. Drew has owned cars from brands as distant as Infiniti and Ford. He trades his ride every couple years, and when the time came to swap out in 2012, he shopped the likes of a Honda CR-V and Acura RDX. But his final choice strayed from SUVs altogether: a 2012 Toyota Camry SE V-6, optioned high with leather seats and a moonroof.

Drew is an unlikely candidate for the Camry, the poster car for burgeoning families. The 66-year-old utilities planner in Del Rey Beach, Fla., wanted the sedan because he has grandkids, and the Camry's 268-horsepower V-6 made easy work of the hourlong drive on Florida's Interstate 95 to see them.

"For the price of the vehicle, and for what you get with it, plus a great interest rate at that time ... I thought it was a hell of a price," Drew says.

He's not the only one focusing on the stale sedan. Family cars amounted to a massive 2.3 million new-car sales in 2012, up 24.8 percent versus 2011. That outpaced overall car sales, which were up 13.4 percent. Nearly one in six new cars sold last year came from the group. The segment boomed in large part thanks to six redesigns for 2012 or 2013: the Camry plus the Chevrolet Malibu, Ford Fusion, Honda Accord, Nissan Altima and Volkswagen Passat. Those six accounted for more than two-thirds of all family cars sold.

Many Improvements

With the redesigns came a host of improvements. Back in mid-2010, the just-redesigned Hyundai Sonata led our $25,000 Family Sedan Shootout, but it dropped to fifth place in last month's reprise -- a testament to the segment's ever-improving drivability and quality. The sedans generally fared well in the Insurance Institute for Highway Safety's new small-overlap frontal test, beating out a group of pricier luxury cars that IIHS tested a few months earlier. Mainstream versions of the Camry, Accord and Altima boasted EPA combined city/highway mileage improvements of 3 mpg, or 11.3 percent, versus their predecessors. That brought all three cars just 2 mpg short in combined EPA ratings versus the compact cars their brands sell.

"A few years ago, there was the assumption that there would be a mass exodus of consumers going into small cars because of fuel prices, and that has not happened because [of] these advancements in technology," said Ed Kim, vice president of industry analysis at AutoPacific. "All things being equal, the American consumer will tend to go for the largest vehicle they can get into. So when a [family car] is getting highway fuel economy that's well into the 30s or high 30s, there's no reason to downsize."

Strong Incentives

Shoppers had their choice on deals, too. Drew scored a 1.9 percent interest rate on his Camry but says he sees zero-percent financing on the same car these days. Toyota isn't the only automaker to incentivize sales. Last month, Nissan threw up to $1,000 on the Altima sedan while Ford and Chevrolet did the same for the Fusion and Malibu. These weren't close-out 2012s, either -- they were the redesigned '13s.

The competition, even among redesigns, "creates huge marketing expenditures, which puts downward pressure on prices," R.L. Polk analyst Tom Libby said. "It creates demand."

Ahead of the redesigns, cars have even more on the hood. Last spring, Nissan offered up to $2,250 off the old Altima, and discounts on the outgoing Fusion and Malibu went as high as $3,000. Even Honda, which is ever the incentives avoider, pushed substantial dealer cash for the Accord.

"There's been a tremendous amount of product activity, not just because of the new models coming in but because of big aggressive programs on selling down the old models," AutoPacific's Kim said. "In the months preceding the new Altima's arrival, those were some of the best sales months the [old Altima] had."

Twice in a Row?

Will 2013 see continued gains? It could. Projections for 2013 sales rate in the 15-to-16 million range, which would represent a 5 percent to 10 percent gain over 2012's sales. That alone should add some steam, and so would the fact that several redesigns -- the Fusion and Accord, for example -- arrived at dealerships late in 2012. Both would see their first full year of sales in 2013. Throw in a redesigned Mazda6 that just hit showrooms, and 2012 might not be the only year of the family car.

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