Midsize-Car Market Shows Signs of Life in '04

The Dead Zone.

That’s how a lot of auto makers – the U.S. Big Three in particular – have viewed the midsize-car market in recent years.

And with good reason.

As Americans have stormed dealership lots in search of more and more SUVs, fewer and fewer have driven away in midsize sedans. In fact, demand for midsize cars has been shrinking steadily over the past decade – and that trend is continuing. Volume, which topped 4 million units as recently as 1999, fell to 3.4 million last year and is on pace for another 7% reduction in 2003.

Accounting for 25% of the light-vehicle market in 1995, the middle-car segment has shriveled to a 19.3% share so far in 2003. And to maintain even that volume, the industry has had to resort to some pretty hefty incentives that are squeezing profits in the sector.

As a result, midsize cars have gotten short shrift, with auto makers putting their limited product-development dollars into higher-margin trucks and cross/utilities and all but ignoring what long had been the industry’s sweet spot.

But the winds of change are beginning to stir. Bob Lutz, General Motors Corp.’s chairman-North America, is on record as saying the sector is “where we’re going to make our stand – starting now.”

Ford Motor Co. and Mazda Motor Corp. are planning a raft of vehicles – traditional sedans included – off the Mazda6 midsize platform.

And it doesn’t appear non-traditional Big Three brands will give up the ground they’ve gained in the segment – where they now account for the vast majority of models and about half the volume – without a fight.

This year, the new model launches in the segment are small in number but potentially significant in impact, as the few entries on tap will be worth watching.

The biggest volley for ’04 comes from GM, which is launching its Epsilon-based Chevrolet Malibu sedan and Malibu Maxx hatchback, plus a revamped Pontiac Grand Prix that’s been on sale since March.

GM is counting on big things from the Malibu, which features European-style ride and handling, optional 200-hp 3.5L V-6 (standard in the Maxx) and a number of amenities not previously offered by GM on a car at this price (ranging from a base of $18,995 to a fully loaded $25,575).

Those include a standard power driver’s seat, power windows and locks and tilt telescoping steering wheel. Standard on upper trim levels are adjustable pedals and antilock brakes with traction control.

The Maxx – being dubbed an “extended sedan” by GM – is expected to provide a new dimension for the line, with its adjustable rear seat and enhanced cargo-carrying capability.

Chevrolet is relying on the new Malibu to muster a better effort against segment leaders Honda Accord and Toyota Camry and deliver annual volumes in the range of 200,000 units.

Likewise, American Suzuki Motor Corp. is counting on big things from its new Verona 4-door, its first entry in the midsize-sedan market.

The Verona is Suzuki’s version of the second-generation Daewoo Magnus (the first-generation Magnus was sold as the Daewoo Leganza in the U.S.), built by GM Daewoo Automotive & Technology Co. Ltd. in South Korea.

Its only engine is a 155-hp, 2.5L, inline 6-cyl. The Verona is one of several new vehicles on tap for Suzuki, which is looking to triple U.S. sales by 2007.

It will battle another new import from Korea, the Kia Amanti. The Amanti is powered by a 3.5L V-6 that generates 195 hp and boasts “Mercedes-esque” styling. Kia is targeting sales at 12,000 to 15,000 units per year. Look for both the Verona and Amanti to turn up the price pressure in the midsize segment.

Another one to watch is the new Toyota Prius. Although annual volumes are expected to remain relatively low – 36,000 units – the second-generation hybrid model boasts a more sophisticated gas/electric powertrain and adds such features as smart start/smart entry, a Bluetooth compatible navigation system and side curtain airbags.

Basing at just under $20,000, Toyota is nudging the Prius into the mainstream car market with an all-out advertising campaign. It also vows to make a profit on the hybrid cars.

Also into the midsize model mix for ’04 are the revamped Nissan Maxima, which has been on sale since March, the all-new Mazda RX-8 and revamped Toyota Camry Solara coupe/convertible.

The Solara moves to the latest Camry platform for ’04, and the resurrected RX features the latest-generation rotary engine from Mazda and, for the first time, four doors.