Toyota is making its new Avensis more upscale than the old model in response to declining sales in the upper-medium segment.
Toyota wants the new Avensis to rival lower-luxury cars such as the BMW 3-series, win more fleet and lease sales, and achieve higher margins.
The share of upper-medium models in western Europe has fallen from 14.9 percent - about 2.5 million units - of total new-car sales in 1997 to 11 percent or 1.96 million units last year.
"The segment has become too fragmented with the arrival of minivans and sport-utilities on the market," said Colin Couchman, senior analyst at DRI Automotive in London. "The main players in this segment could be faced with flat sales in the near future."
Last year, the No. 1 upper-medium seller was the Volkswagen Passat, with sales of 338,000 units. The Passat was followed by the Ford Mondeo and Renault Laguna. Toyota sold 109,000 units of the previous-generation Avensis for seventh place.
Toyota isn't planning for major volume growth with the new Avensis, which it expects to sell at a rate of about 130,000 units a year, peaking at 140,000 in 2005. The model's best year so far was 129,000 units in 1998.