Image: Toyota Unveils 2012 Camry
Kevork Djansezian  /  Getty Images
Toyota launched the new 2012 Camry with much ballyhoo earlier this month. But reviews of the new sedan haven’t been quite so enthusiastic.
Image: Paul A. Eisenstein, contributor
By contributor
updated 8/31/2011 7:36:31 AM ET 2011-08-31T11:36:31

“This launch is very important for our company,” proclaimed Akio Toyoda as he walked into the heart of the Georgetown, Ky., assembly plant that just started to build the new 2012 Toyota Camry.

“The car has become a symbol of Toyota’s success and an opportunity to show the world again what Toyota is all about,” he said.

The fact that Toyoda — the grandson of the Japanese automaker’s founder and himself the company’s current CEO — came to Kentucky only underscored the critical role of the new Camry. The sedan has been America’s best-selling passenger car for the last nine years running. But production shortages resulting from Japan’s March earthquake and tsunami make it less likely the Camry will repeat that feat for 2011.

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The shortages, in fact, only complicate matters. Toyota is still trying to live down the quality and safety problems that seemed to land it unflattering headlines almost every week in 2010. While recent reports suggest those problems are on the mend — even as Toyota plants resume normal production — initial reviews of the new Camry can be charitably described as mixed.

Toyota isn’t the only Japanese car giant facing unexpectedly tough challenges. Honda was slammed by the March 11 natural disaster. Its new, 2012 Civic — as important to Honda as Camry is to Toyota — has been in short supply since its aborted spring launch, and the car won’t be back to normal inventory levels until the fall, according to John Mendel, the top U.S. executive at Honda of America.

Story: Toyota unveils first Camry redesign in 5 years

The new Civic has also taken sharper blows from the media than the Camry. The highly influential Consumer Reports magazine recently declared that the redesigned subcompact now “ranks near the bottom of its category.”

That review is something the automaker takes "very seriously,” said Mike Accavitti, the new marketing chief for Honda.

How much of an impact the headlines will have on Toyota and Honda sales — once production is back to normal — remains to be seen. But industry analysts say there’s reason for the Japanese carmakers to worry.

The two automakers have some of the highest loyalty rates among new car buyers, but depending on current owners to carry things forward may be asking too much. Indeed, nearly half of Toyota and Honda sales still come from “conquests,” when a car shopper trades in a competitor’s product. And those are the car buyers most likely to be impacted by last year’s headlines and this year’s poor car reviews.

“A lot of people who buy Toyotas and Hondas look to Consumer Reports to validate their decisions about what to buy next,” said Dave Sullivan, automotive analyst with AutoPacific, Inc.

Bad reviews mean the two Japanese giants could “have a harder time” winning over the conquest buyers, “especially after they see what the new competition has to offer,” he added.

Traditionally rated at the back of the pack, cars made by U.S. and Korean automakers, such as the Ford Focus and Hyundai Elantra subcompacts, are suddenly winning rave reviews. The Chevrolet Cruze, the replacement for the unloved Chevy Cobalt, has recently landed at the top of the sales charts.

“The marketplace is a dogfight,” acknowledged Honda’s marketing chief Accavitti. “In all my years I haven’t ever seen so much competition in darn near every segment.”

Still, Accavitti insists that buyers will downplay criticism of the Civic — as well as a subsequent Consumer Reports article that took aim, more broadly, at Honda itself. The brand’s long-term reputation, he contends, “will drive buyers into the (Honda) showroom.”

Not everyone is so sanguine, however, and a number of analysts are betting that the conventional automotive order could be up for grabs over the next several years even after production levels return to normal.

That has led upstart carmakers — both domestic and Korean — to increase the pressure on their rivals. They’re rolling out more new products, adding more standard features and, in many cases, piling on the incentives to try to lure in once-loyal Toyota and Honda buyers while supplies of those carmakers’ cars are still short.

But Toyota is fighting back. It has started ratcheting up incentives in recent months and, significantly, it will drop the price on various Camry models by as much as $2,000 when the 2012 edition officially goes on sale in October.

Story: Car sales help drive away double-dip fears

That’s a difficult decision considering current exchange rates. At the currently lopsided 76 yen to the dollar, it’s almost impossible for Japanese carmakers to make money on cars imported from Japan — and even those assembled here, like the Camry, are penalized for every part imported from the home market.

But losing ground with Camry would be even more costly, and the carmaker will do everything it can to back up a promise by Toyota division boss Bob Carter that the midsize sedan “will continue to earn its position as America’s number one-selling passenger car.”

As for Honda, Accavitti insists his company won’t do what his former employer was prone to do — dump cars into low-profit car rental fleets just to make its sales numbers. Honda hasn’t ramped up incentives to the degree Toyota has, but that may be only a matter of time. The test will come this autumn when Honda effectively re-launches the new Civic with a major ad campaign.

Toyota, meanwhile, will attempt to overwhelm the critics with what Carter promises to be the most expensive launch budget in its history.

The industry giant has the muscle — and it will now need to use it more than ever. The era when Honda and Toyota could simply introduce new products and expect buyers to flood to the showrooms may be over.

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Photos: The hatchback makes a comeback

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  1. The hatchback’s comeback

    By Paul A. Eisenstein , contributor

    American motorists are often described as fixed in their ways and unwilling to try new things, yet there are signs that this might not hold true anymore. There are signs car buyers are open to alternative body designs that can enhance both form and functionality, especially as more and more motorists downsize to reduce fuel costs.

    In some cases, that mean old ideas are making a comeback – the hatchback, for example.

    Take Audi's A7.

    After years as an also-ran in the global luxury car market, Audi has been steadily gaining ground on its leading challengers, Germany’s Mercedes-Benz and BMW, as well as Japan’s Lexus – and its reputation for striking design is a major reason.

    The A7 is Audi’s latest hit. It’s a coupe-like sedan or, more accurately, a coupe-like hatchback. Five-door designs are wildly popular in Europe and many other parts of the world but have long been anathema to American motorists. (AP) Back to slideshow navigation
  2. Ford Fiesta

    While some carmakers are still reluctant to bring hatchback designs to the U.S. market, Ford is betting big on 5-door models like the Fiesta subcompact, shown here, and the new Focus compact.

    Demand for hatchbacks in the U.S. small car segment has surged from 15.5 percent in 2003 to 41.8 percent last year. Overall hatchback sales, meanwhile, shot up 63 percent between 2006 and 2010, to 475,048. (Ford / AP) Back to slideshow navigation
  3. Chevrolet Corvette

    Would a rose by any other name smell so sweet?

    The Bard’s words might as well be applied to products like the Chevrolet Corvette. Sure, most motorists are likely to call it a sports car, but take a closer look and you’ll realize the ‘Vette has traditionally gone for a hatchback design – as have many of the most popular classic sports cars. (Gm / Wieck) Back to slideshow navigation
  4. Jeep Grand Cherokee

    What is the SUV if not a hatchback (unless you prefer to call it a station wagon on steroids)? Ironically, it’s the big rear hatch that gives so much flexibility to the conventional sport-utility vehicle, as well as its more fuel-efficient cousin, the crossover vehicle. Count them and hatchback sales suddenly rival those of the sedan. (Stan Honda / AFP/Getty Images) Back to slideshow navigation
  5. Mini Cooper

    The Mini Cooper is another European take on the hatchback. The iconic small-car brand has shown that both small cars and 3-door designs can click with the American motoring public. Mini will soon offer a total of seven hatch-based designs in the U.S. market. (Mini) Back to slideshow navigation
  6. BMW X6

    BMW’s unusual X6 is a hatchback blend of conventional SUV and sports car. The muscular design has had a significant influence on both luxury and mainstream automakers over the last several years – even though it is more an exercise in form than functionality. (Tom Kirkpatrick / eb.andriuolo/BMW) Back to slideshow navigation
  7. Honda Crosstour

    Among those who have echoed the X6 design are Honda and its up-market sibling, Acura.

    The mainstream brand has struggled with the Accord Crosstour and hopes to pump new life into the design by adding more features and simplifying the name to just Honda Crosstour for 2012.

    The Acura ZDX isn’t doing much better in the market and both may not last much beyond the 2012 model-year – which could extend the myth that Americans won’t buy hatchbacks. (Honda) Back to slideshow navigation
  8. Ford Pinto

    The Ford Pinto is one reason why hatchbacks lost their luster in the U.S. market. The once-popular subcompact was a mainstay of the 1970s but, like so many hatchbacks of the era, it offered little in the way of creature comforts and other amenities. Making matters worse was the Pinto’s flawed gas tank design, associated with a number of deadly fires. (Ford / Wieck) Back to slideshow navigation
  9. Chevrolet Vega

    The Chevrolet Vega was another reason why hatchbacks lost their appeal in the U.S.

    Though stylish in its day, the relatively stripped-down Chevy experienced a variety of quality and reliability problems that hurt the image of both parent General Motors and of the hatchback itself. Once one of the most popular body styles, demand for 3- and 5-door models slipped to barely 1 percent of total U.S. sales by the middle of the last decade. (© Bettmann/CORBIS) Back to slideshow navigation
  10. AMC Gremlin

    Few carmakers were more committed to the hatchback than American Motors.

    It offered a wide variety of alternatives -- especially considering the size of the company. The Gremlin, shown here, was among its most popular hatch models, along with the Alliance, marketed under the brand of one-time French ally Renault.

    But one of the most curious AMC offerings was the Pacer, originally designed to use the radical Wankel rotary, though converted to a conventional engine due to quality and mileage problems with the rotary. (Hulton Archive / Getty Images) Back to slideshow navigation
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