Peugeot and Toyota commit to midsize segment despite SUV shift

August 11, 2018 06:01 CET

Peugeot and Toyota are the latest automakers to commit to Europe’s mainstream midsize segment despite forecasts showing customers will continue to move to SUVs, while Ford, once a dominant player, is not commenting on whether it will replace its Mondeo.

The segment is expected to decline to less than 400,000 annual sales by 2021 from just below 540,000 in 2017, according to estimates from LMC Automotive. The market will drop 10 percent this year after falling 12 percent in 2017, LMC forecasts.

Those numbers are a far cry from the mid-1990s when cars such as the Volkswagen Passat, Renault Laguna, Opel/Vauxhall Vectra and Ford Mondeo accounted for more than one in five sales in Europe.

In the first five months, the midsize segment totaled just 3.2 percent of sales across Europe, according to data from market analysts JATO Dynamics, making it the No. 9 segment. The small-car sector was No. 1, taking a 19 percent share of overall sales.

The Passat dominated the midsize segment through May with sales of 74,791, more than double the second-place Skoda Superb. The No. 3 Opel/Vauxhall Insignia is gaining ground fast, with sales up 49 percent, and looks set to overtake the Superb soon. Sales of the Ford Mondeo, meantime, sank 15 percent to 22,486. The new VW Arteon liftback moved into fifth place with 10,066.

The Opel/Vauxhall Insignia is in position to become Europe’s No. 2-selling midsize model this year.

New arrivals

Peugeot will start sales of its new 508 range in September. To stimulate interest in a tricky sector for French manufacturers (Renault is struggling to sell its relatively new Talisman, with sales down 45 percent through May), Peugeot has addressed the design to make it look more appealing, swapping the sedan model for a so-called “fastback” look.

“We wanted a more dynamic-looking car,” Peugeot Design Director Gilles Vidal told Automotive News Europe at the 2018 Geneva auto show. The automaker has since unveiled a wagon version of the 508. IHS Markit estimates that annual European production of both 508 models will be about 80,000 next year, with an additional 12,000 in China.


Meanwhile, Toyota has committed to replacing its aging Avensis sedan and wagon with a hybrid version of its Camry, which will be imported from Japan. Toyota said the Camry, which will go on sale in Europe next year, will be aimed at fleet customers looking for a low-CO2 model.

Practical customers

Midsize cars will continue to appeal to practical customers who won’t tolerate the economy and size compromises of SUVs, JATO thinks.

“They are still popular among Uber drivers in big cities such as Paris, and they are a good choice for business-car fleets,” said Felipe Munoz, a global automotive analyst at JATO. The Camry is the latest in an increasingly wider choice of hybrid models in the segment. The Passat GTE plug-in hybrid was one of the first, while the Kia Optima plug-in hybrid arrived in 2016.

Demand for the Renault Talisman in Europe fell 45% in the first 5 months.

Next year, Skoda will launch a plug-in hybrid version of the Superb, while Peugeot will start selling a plug-in hybrid version of the 508 in the latter half of 2019.

Ford doubts

Sales of hybrid models in the midsize segment climbed 89 percent to reached 5 percent of total sales through May, JATO said.

Ford offers a hybrid version of its Mondeo, which doesn’t plug in. Ford has said the current Mondeo remains part of its core European lineup despite fears for the car’s future after the company announced it wouldn’t replace its current sedan lineup in the U.S. — including the Fusion, on which the Mondeo is based. The current Mondeo was launched in late 2014. Ford wouldn’t comment on a Mondeo successor.


“Ford’s decision [in the U.S.] makes it more difficult to justify the future of the Mondeo,” Ian Fletcher, principal analyst for IHS Markit, told Automotive News Europe.

One possibility is a complete reinvention of the car. “Our current assumption is that the replacement for the current Mondeo will be an all-electric model built in China,” said David Oakley, an LMC Automotive analyst for Europe, the Middle East and Africa.

One automaker unlikely to abandon the midsize sector is the Volkswagen Group, which can call on continued strong demand in Germany for its Passat and Skoda Superb models. VW’s home market is by far the biggest for this segment in Europe, accounting for 68,646 sales in the first five months, nearly double those of the next-biggest market, the UK. Poland, meanwhile, came close to overtaking France in fourth after French sales slumped 29 percent over the same time frame.

Germany loves its wagons, and that’s why wagon versions of midsize cars are the biggest sellers in the segment, accounting for a 60 percent share through May.

Sales of hatchback-styled models grew 39 percent to take a 20 percent share, vindicating Peugeot’s switch from a sedan to a hatch, while sedan sales fell 23 percent, resulting in a share of just 13 percent.

Diesel drop

Diesel’s falling share in Europe is repeated in this segment, with sales down 22 percent in the first five months. Demand for gasoline-powered models, meanwhile, rose 63 percent. Diesel is still dominant, however, with a 60 percent share.

A switch to gasoline generally means increased fuel consumption. But cars in the midsize sector are now generally built on stretched versions of compact architectures, which are lighter and therefore can be made more economical.

Peugeot, for example, claims that building the 508 on PSA Group’s EMP2 platform has helped reduce weight by about 70 kg compared with the previous-generation car. Meanwhile, VW’s Passat and Skoda’s Superb are both built on VW’s MQB architecture, shared with the Golf, while Toyota’s Camry uses the company’s global TNGA platform, shared with the new Auris subcompact.

The midsize sector might be in decline now but LMC expects an end to the slump by 2022, partly because it will be revived by new models but also because the volume automakers will have plugged gaps in their midsize SUV ranges. Said LMC’s Oakley, “There will continue to be a place in the market for mainstream midsize cars.”

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You can reach Nick Gibbs at ngibbs@crain.com.

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