A Deeper Look at Lexus USA’s 2009 Sales
Bloomberg has published a revealing look at the US Lexus auto sales and how it’s affecting Toyota’s bottom line:
U.S. Lexus sales shrank 27 percent in Toyota’s fiscal year that ended March 31, versus a combined 23 percent drop for Toyota and Scion models. While the premium line accounts for 12 percent of Toyota’s overall U.S. volume, analysts estimate it has generated a much larger portion of profit.
This isn’t out of line with the other luxury car brand manufacturers, which has seen a 37% drop in sales over the first quarter of this year. What’s interesting is how Lexus is dealing with it, as compared to its competitors:
Overall luxury car incentives averaged $4,022 last month and luxury SUV discounts were $3,944, according to Edmunds.com. Lexus first-quarter incentives trailed BMW, which offered $4,936 a vehicle and Mercedes-Benz’s average of $4,569. The two European companies increased such spending last month, while Lexus’s dropped to $1,928.
Luxury segment competitors’ “incentive spending is at incredible levels now and that’s not necessarily the best way to run a business,” Templin said. “Our focus at Lexus has never been on volume.”
That’s a significant difference, and most likely the sole reason why Lexus sales volume decline has been so pronounced. Lexus’ March 2009 sales were off 40.6% compared to last year, as opposed to BMW’s -21.2% and Mercedes’ -25.0% drops. However, bring the difference in incentives into account, and all of a sudden it’s easy to see how BMW managed to pass Lexus in sales-to-date.
It’s an interesting play, and looks to be about making a statement—a contrary thing in this economy.
(Thanks Ken!)
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Great write-up and analysis, but I think there’s another factor here at play as well: Lexus (as well as Audi, Acura, Cadillac and Infiniti) have what, especially in this economy, is an advantage: they are, in essence, marketing/sales divisions of larger companies that have a broad product portfolio that covers most, if not all, segments of the market. Thus, their luxury brands’ sales decline is somewhat compensated for and cushioned by lesser drops in their mass market, less expensive models (or, simply, their loyalists migrate downward to their mass-market brands), whereas’ Mercedes and BMW’s lack of mass-market divisions forces them to either offer greater money-losing incentives or lose their clientele altogether.
i hope sales go up soon
A very good point—it probably explains Lexus’ zen attitude to the economic meltdown.
I wonder though, isn’t there more money in selling a car at a discount as opposed to not selling the car at all? I guess Toyota/Lexus has a very tight inventory, but they’re still a business.
Lexus Had better come through with incentives .They will lose their core customer and their Top spot in the Luxury sales Market if they stand pat.Not a wise choice.
AS a loyal Lexus Customer looking to buy a new car soon I always wait for incentives. However, this current position is making their German rivals VERY attractive right now.
I agree. I’m in the market right now and while Lexus is my first choice, the incentives being offered by BMW are very seductive. Such a shame because they are losing the opportunity to create some new customer loyalty.