Over the first quarter of the year, new sales of mid-size cars have grown by 26% which is double the rate of growth for the overall market and six points better than gains made by their compact car counterparts.

Certainly high gasoline prices have played a role in promoting sales for the segment, but results are also due in large part to 2012 model year redesigns of two notable models; the Toyota Camry and the Volkswagen Passat.

Initial consumer reaction to a major redesign can have a deep and lasting impact on a manufacturer’s bottom line.  Well received updates contribute to overall brand value while poorly received ones can force a manufacturer to make updates sooner than planned – Honda’s new Civic is a good example of this.  In addition, manufacturers will have to increase incentive spending in order to move metal which chips away at overall profitability and negatively affects used value retention. 

Certainly both Toyota and VW are hoping for the former and not the latter as they strive to conquer the common goals of increasing market share without sacrificing profitability. 

At Toyota, the Camry will be a cornerstone in the brand’s attempt to regain market share lost due to last year’s barrage of natural disasters.  So far things are off to a promising start as sales of the redesigned model are up 38% on a quarter-over-quarter basis. 

As for the Volkswagen Passat, after a brief hiatus during the 2011 model year, sales are back and stronger than ever.  Through the first three months of 2012, VW managed to sell over 24K new Passats and over 10K of these were in March alone.  To put things into perspective, combined total new sales of the previous generation Passat during its final two years of production were just shy of 24K units. 

In terms of the used vehicle market, NADA’s analysts valued each model for the first time in May’s edition of the Official Used Car Guide.  Average Trade-In values for the 2012 Volkswagen Passat 2.5L SE (equipped with automatic transmission) and the 2012 Toyota Camry LE 2.5 were placed at $20,935 and $19,005, respectively (national average).  These figures equate to retention of 84% for each model (average trade-in value divided by equipped MSRP), which places their retained value five points above the current segment mean (79%) and in a tie for second place three points back of segment leader Kia Optima (87%). 

Next year, age and 2013 model year redesigns of the Chevy Malibu, Ford Fusion, Honda Accord, and Nissan Altima will most likely apply downward pressure to retained value, but for the time being the Camry and Passat find themselves in a strong position of used value strength. 

Make sure to check out May’s edition of Guidelines as we’ll provide a one-year retention estimate for both the Camry and Passat, and will spotlight Official Used Car Guide values for two alternative powertrain models, the Chevrolet Volt and the Nissan Leaf.