Relief for midsize sedans? Not much

With all the action in midsize sedans these days, talk has turned to whether the segment's long, gloomy slide is about to end.

Just don't bet on it. Redesigns of the three top-selling midsize cars could slow the category's decline, but probably not for long, industry executives and analysts say.

The longtime No. 1 category fell from first to second place in 2015 behind compact crossovers and has slipped behind compact cars and full-size pickups in 2017. Last year, 2.1 million midsize cars were sold, but the segment has fallen 18 percent through the first seven months.

This year's launches of the new-generation Toyota Camry and Honda Accord and the redesigned Nissan Altima early next year are set to give the category a boost. Still, IHS Markit says the beleaguered sector could shrink a further 20 percent by 2025.

Executives touting the new Camry and Accord say the 2018 models will spark fresh interest throughout the segment. The Camry is sportier and introduces new engines and transmissions that boost fuel economy and horsepower. The Accord has a trio of modern engines including a first-ever turbocharged version and optional 10-speed automatic and a series of upscale features.

But even Toyota and Honda execs ​ carefully parse expectations. Citing "innovative products and investment for the first time in years," Bob Carter, executive vice president of sales for Toyota Motor North America, said this month "we will see some stabilization of the midsize sedan market."

And as much as Jeff Conrad, senior vice president of the auto division at American Honda, thinks the technology-laden new Accord will command attention, he's cautious about the segment.

"Will it stop the shrinking? Maybe slow it down a bit," he said in July.

Others see continued declines in midsize car volume and the number of competitors, but potential for a healthier segment for the survivors.

Kelley Blue Book analyst Akshay Anand says new versions of the two best-selling midsize cars will help an aging segment.

"The Camry and Accord, along with the Tesla Model 3, are the three biggest launches of 2017," he said. And a redesigned No. 3 Nissan Altima in early 2018 will help renew consumer interest in the segment, he added.

The segment could use some help. Once the core product and best-seller of most full-range automotive brands, midsize sedans have taken a pounding in recent years. Amid the U.S. auto industry's longest sales boom in nearly a century, midsize sedan sales fell to 2.1 million units in 2016, tumbling 16 percent from 2012.

"Midsize sedan segment volume decline has been pretty dramatic since 2000 when it was 3 million units," said Stephanie Brinley, senior automotive analyst for IHS Markit. "But the 2017 to 2025 decline shouldn't be as sharp."

IHS Markit forecasts U.S. midsize car sales at 1.80 million in 2020 and 1.72 million by 2025.

As consumers in the U.S. and worldwide drive a profound shift from cars toward taller and roomier crossovers and SUVs, sedans and coupes lose economies of scale and profitability. As a result, cars will receive less investment, and some midsize segment entries likely will receive less innovation, longer product cycles or even model consolidation, analysts say.

Mark Wakefield, head of the Americas automotive practice for consultancy AlixPartners, said reduced midsize car investment is baked into manufacturers' plans for the next three years.

"Between 2017 and 2020, 68 percent of U.S. product launches are light trucks, even higher than light trucks' market share" he said. "The volume of launches is moving toward light trucks and sales typically follow new product."

The top midsize car players have high volumes they are likely to defend, Wakefield said. But smaller players may choose to emphasize hotter segments.

"For them the decision is this: If you make a great product in crossovers, you're a winner. If you make a great product in midsize cars, you're a player," he said. "In looking at opportunity, you always want to invest where you have the wind at your back."

Anand said most midsize car competitors lack the marketing cachet of sales leaders Camry, Accord and Altima.

"It's almost the inverse of full-size pickups [where] it's all Detroit, and Toyota and Nissan struggle to break through," he said. "In midsize sedans, if you are anybody but Toyota, Honda or Nissan, then you have to wrestle with the top dogs forever."

IHS Markit's Brinley sees a different segment split. She says the top seven entries will remain indefinitely, citing the Ford Fusion, Chevrolet Malibu, Hyundai Sonata and Kia Optima in addition to the top three.

But if segment volume declines 300,000 by 2020 and a further 100,000 by 2025, she says there may be more segment attrition akin to Fiat Chrysler's decision last year to kill the Chrysler 200.

"The question isn't the current generation, but the next generation of products," she said. Stressing that automakers haven't yet decided, she said possibilities include dropping out, shifting from North America production to low-volume imports of a midsize model that sells well overseas or consolidating midsize and large models. Her list of large-car platforms that face long-term decisions on consolidation includes Toyota Avalon, Nissan Maxima and Chevrolet Impala.

"Some nameplates will go away," Brinley said. If so, the midsize survivors can focus more on features and technology than incentives, she added.

"Even a midsize sedan segment at 1.7 million can be healthier for those that stay, especially if manufacturers get more scale by parts sharing between cars and crossovers and SUVs."