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!)