This article in MSN warns that Toyota needs to update their Camry image for younger generations. "Camry buyers are on average in their low to mid-50s, and if Toyota doesn’t change the trajectory ... the Camry will become the Oldsmobile or the Buick of 20 years from now,” he said. “Their customers will be the oldest Americans, who are dying out of the market every day. Toyota is adamant that they are not going to let this happen, but they may be powerless to change it.” As discussed in class, Toyota has the challenge of marketing to a younger generation without alienating their core group of consumers. Do they make the Toyota Camry appealing for everyone or do they create a sub-brand to target younger consumers? Initial results appear that Toyota is trying to capture the younger consumer through launching their less expensive Scion brand and by also trying to update the Camry to a sportier version.
Do you think Toyota can appeal to a younger audience? Do you think Toyota is doing the right thing by updating the Camry? Will these updates drive the baby boomer generation, their core audience, to "older" style cars like Oldsmobile? Toyota's claim to fame is that once you buy a Toyota, you become a repeat buyer. Will this remain true with a younger generation or is the Toyota brand name going to become interchangeable with other auto makers?
Is Camry this generation’s Buick?
Popular sedan becoming this generation’s Buick, Oldsmobile
By Roland Jones
Business editor
MSNBC
Updated: 4:19 p.m. ET Jan 24, 2007
For several years in the late 1970s and early 1980s, the Oldsmobile Cutlass was the best-selling car in America, boosted by popular designs, positive reviews and the perception of quality and reliability.
How times have changed. Today, the once-venerable General Motors brand lies defunct, phased out in 2004 after steadily declining sales. The Olds was killed by its image as old and stuffy, despite an attempt to revive it with a public relations campaign in the late 1980s that promised the new models were “not your father’s Oldsmobile.”
It’s a cautionary tale worth noting, especially for the Toyota Camry, the best-selling car in the United States for eight of the past nine years. Statistics compiled by consulting company Global Insight show that, up to the 2002 model year, the average age of U.S. buyers of Toyota’s popular sedan rose by one year for every year that passed. The brand is in danger of becoming outdated.
“This is the price you pay for making a connection with a generation,” said John Wolkonowicz, senior auto analyst for North America at Global Insight. Wolkonowicz notes that Toyota’s bread-and butter sedan, known for dependability and comfort, has made a solid connection with baby boomers, typically born between the mid-1940s and mid-1960s.
“Camry buyers are on average in their low to mid-50s, and if Toyota doesn’t change the trajectory ... the Camry will become the Oldsmobile or the Buick of 20 years from now,” he said. “Their customers will be the oldest Americans, who are dying out of the market every day. Toyota is adamant that they are not going to let this happen, but they may be powerless to change it.”
Brand changes aren’t always successful, despite the best marketing makeovers. But Toyota shouldn’t be underestimated, Wolkonowicz added.
Since the 1990s, the Camry sedan has transitioned from its boxy beginnings to a more athletic exterior, while retaining a reputation for reliability, affordability and good fuel economy. Toyota sold 450,000 Camrys in 2006, up nearly 4 percent from 2005, according to Autodata, and well ahead of the No. 2 Accord, which sold 354,000 units, a decline of about 4 percent.
Still, before the Camry came the Ford Taurus, which held the position as the nation’s best-selling car between 1992 and 1996, only to lose its perch at the top of the automotive tree to the Camry in 1997. Ford produced its last Taurus last year.
Jack Nerad, executive market analyst for Kelley Blue Book, which tracks the automotive industry, says there does seem to be a natural arc for a successful car brand. Older nameplates like Buick, Pontiac and Mercury are all struggling, he said, although none of them are showing signs of going away.
“But it’s interesting because a few years ago you would have added the Cadillac brand to the list of struggling brands, and now it is resurgent,” he said. “It has shown that a brand that is on its last legs can find a new market given the right product and the right marketing strategy. Thanks to the CTS, Cadillac has a younger market; it has become youthful and edgy.”
Capturing the Generation X and Y demographics — generally speaking, those born after 1965 — is the aim of most carmakers, said Wolkonowicz. These consumers are more interested in BMWs than Camrys, he said, and many of them are buying premium models on the used market.
Toyota is working to capture this demographic with its lower-cost Scion brand. The initial Scions — the xA subcompact, the xB wagon, and to a lesser extent the tC sport coupe — received middling reviews. The next generation xB and the new xD, the successor to the xA, will be unveiled next month at the Chicago auto show.
“My guess is these new models will yet again be steps along the way,” Wolkonowicz said. “In typical fashion, Toyota is taking it slow and easy and getting better and better with every step. Scion will not be an overnight success. Ultimately, they will be a success, given Toyota’s might and money — it will just take time.”
Scion certainly seems to be holding its own. In a year of declining vehicle sales, Scion’s sales were up 10.6 percent in 2006 over 2005, and its share of the light vehicle market rose to 1.04 percent from 0.92 percent a year earlier.
The second part of the Japanese carmaker’s plan to capture younger consumers is to make the flagship Toyota brand more exciting by designing more expressive vehicles, adding emotion and horsepower, Wolkonowicz said.
“Toyota is known for reliability and good resale value,” he said. “Toyota is a rational purchase — it’s for people who care about making a smart purchase decision. It doesn’t get the adrenaline flowing.
“So it remains to be seen what they can accomplish here. The car business is like fashion, and like the fashion business, brands carry cachet. They also carry baggage, especially for younger people. It depends on whether they think the new styles are cool.”
Early signs suggest Toyota’s plan to rejuvenate the Camry with a sportier, more aggressive design is working, according to Bill Kwong, a spokesperson for Toyota. He says company data show the median age for the base Camry CE model buyers declined from 55 to 48 from 2005 to 2006.
“Yes, the age of Camry drivers was starting to get older,” Kwong said. “They are very loyal, so every time they come back to buy a new one they get a little older. But we think the new data show our buyers’ ages are decreasing.”
But Toyota faces other challenges, including questions about quality. The automaker last year faced an issue of engine damage caused by oil sludge that nearly resulted in a class-action lawsuit. More recently, Toyota said it will recall 533,000 Tundra pickups and Sequoia sport utility vehicles because of potential steering problems. The quality issues have led some to ask if Toyota is stretching itself thin to capture more U.S. market share.
And the Camry is a tempting target for rivals. At the recent Detroit auto show, General Motors unveiled a drastically restyled 2008 Chevrolet Malibu, aimed directly at the midsize sedan market.
Honda showcased a concept coupe design for its top-selling Accord, and the company stands to benefit down the road if Toyota falters, according to Wolkonowicz.
Many car consumers see Honda and Toyota the two brands as interchangeable as Coke and Pepsi, he said. But unlike Toyota, Honda enjoys strong appeal among Generation X and Y drivers as well as among baby boomers, he said.
“They have the attention of everyone born after 1954, and that’s a great position to be in,” he said. “So the company could come out of this looking good as the decades pass. But given Toyota’s huge cash position I think they will have the wherewithal to deal with all this.”
© 2007 MSNBC Interactive© 2007 MSNBC Interactive
http://www.msnbc.msn.com/id/16774146/page/2/
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3 comments:
This article spoke out to me since I fall into the "younger audience" Toyota seeks and I previously owned 2 Toyota Camry's (1989, 1992). Both models were hand down cars but they served their purpose well. I switched to VW when I started earning because of the message the brand delivered and because of its legacy (6th owned in the family).
I want to point out that the article seems to miss the point that young people don't necessarily need a car as big as a Camry. With the market flooded by niche products and advertising focusing on making brand images hip, the Camry should remain in its current place of reliable transportation for a large age audience. Toyota was smart in launching Scion as a sub-brand, but to create more upsell as consumers of their products age, they should spice up their Corolla. The question of whether the Camry should be updated is a no brainer - it should, as all cars are every 4-5 years (depending on product life cycle). Though I may face more problems with my VW than my old Toyota's, I have no intention of going back to the Scion/Toyota/Lexus fold. My plans are to move upmarket as I get older into VW's luxury division - Audi. This hopefully gives you one perspective on brand perceptions even as an owner (as Toyota DOES have many repeat purchasers). The Scion brand to me represents something for more 1st time buyers and those who are focused on customization. The new Camry is not as boring as its predecessor but part of the younger generation's culture focuses on being an individual. It's hard to project that image when you are driving what you see every 3 minutes on the highway.
Well, as proud relatively young Toyota owner I feel the need to defend my brand :) In fact, I am a Camry owner, only my Camry is called Camry Solara, because it is a sportier two-door version of the Camry. I bought it six years ago specifically because of its modern yet classy image and I still consider it such. And know quite a few young people who chose Camry Solara for that reason. Actually, I'm upset seeing so many Camry Solaras on the road now days - would have prefered it to stay more "exclusive."
So, to answer the questions - yes, it wouldn't hurt the original Camry to be updated a little bit primarily because it hardly had big modifications in recent years. However, when people proclaim Camry to be old-fashioned they should remember that Camry is more like a product line rather than one product, and meets needs of various consumers.
I appreciate your comments Olga! The fact that the Camry model line meets the needs of so many consumers is why it lacks exclusivity as a brand. It's a great product no doubt...but having said that, Toyota is now dropping the Camry Solara from the product line, focusing in on just the 4-door Camry. Makes you wonder - it seems like Toyota is less focused on niche marketing and not set on catering to a more youthful audience that prefers 2-doors perhaps. Instead they are doing what makes them the most money (via most sales)
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