Lexus Still Struggling in Japan

BusinessWeek has a story in this week’s magazine about the issues Lexus is having establishing the brand in Japan:

Lexus struggling in Japan

Although Lexus hit American showrooms 19 years ago and has been the top-selling luxury nameplate in the U.S. since 2000, it didn’t arrive in Japan until 2005. By that time German brands dominated the high end, and Lexus has had a tough time getting a toehold, reaching only 60% of Toyota’s initial sales projections. In 2007, Lexus moved 34,800 cars—about what it sold in December alone in the U.S.—and sales so far this year are down.

Worse, the buzz Toyota created for Lexus may have benefited the Germans…“The introduction of Lexus is energizing the luxury car market,” says Ashvin Chotai, an independent auto consultant. But few customers have steered away from the German makes. Chotai says 80% of early Lexus buyers were former Toyota drivers; only 5% came from Mercedes or BMW.

Considering Lexus has only been in Japan since 2005, it doesn’t seem all that surprising that it would struggle to establish a foothold, but I think the center of the issue is the fact that it’s a Japanese company, and would be expected to do better in its home country.

The truth of the matter is, up until 2005, Lexus cars were sold in Japan under the Toyota nameplate, the GS was the Toyota Aristo, the SC was the Toyota Soarer, and so on. Then, after the switch, the same car saw a price increase of 20%, which had to be confusing for the Japanese customer, even a little off-putting. This will take a few years to fade, until Lexus stands on its own.

Future Taste of Lexus Events Cancelled

Taste of Lexus

Beginning this year, Lexus USA will be replacing their annual Taste of Lexus travelling test drive events with a series of three separate tours, as they try to bring the focus back on the vehicles and not the event itself:

“People were coming because we were giving three to four hours of entertainment value.” As a result, he says, the percentage of lead generation that Lexus was getting from the program wasn’t as strong as it had been. “We were getting lots of owners,” he [Brian Bolain, national interactive and automotive events manager] says.

Instead of one tour in the summer, surrounding Lexus vehicles with epicurean and prestige brands, Lexus will now do three separate tours during the course of the year, each focusing squarely on the cars. The tours will also use an “intercept” approach: instead of Lexus creating its own event and doing mass mailings to generate its own traffic, the company will do “pop ups” that bring its vehicles to venues owned by complementary brands.

Bolain says the first tour, featuring the new performance-tuned IS-F and GS 460 sedans, will comprise four racetrack components. The test-drive will visit eight markets.

It seems the main problem was that owners were making up the majority of the event visitors, in some cases it was as high as 75% owners vs. potential customers. The article also mentions that the first tour, featuring the IS-F and GS 460, will be visiting locations like high-end fitness centers, a strange venue if I’ve ever heard one.

Really, it’s events like Taste of Lexus that can keep current customers in the fold, and it doesn’t make a whole lot of sense to drop it entirely. Why not run the tours concurrently?

[Source: Marketing Daily]

New Job Design Lexus LS Body Kit

Job Design Lexus LS Body Kit

Job Design, a Japan tuning firm specializing in Lexus & Toyota modifications, has released a new body kit for the Lexus LS, consisting of front wheel vents, a super-dropped suspension and new front & rear bumpers.

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I think it’s only natural, in light of the LS’ rather somber and elegant design, that body kit manufacturers would feel the need to gussy it up, but surely there’s a better option than making it look like a mix between VIP & Buick.

[Via: Kultivate’s Weblog]

Classic Top Gear 1990: Lexus LS 400 vs. Mercedes 420SE vs. Jaguar 4.0 vs. BMW 735i

Every once and a while, a classic Lexus LS 400 clip will show up on Youtube, showing the car up against its competitors, and it always amazes me just how throughly Lexus thought out their first model. Here we have a 1990 video clip from Top Gear, putting the LS 400 up against the Mercedes 420SE, Jaguar 4.0, and the BMW 735i:

To think that the Mercedes cost £4000 more than the LS 400, and didn’t even come with air conditioning or a radio (mind you, it was the long-wheelbase version). I’ve read that the luxury brands at the time were fairly complacent, but I had no idea of the extent.

Hybrid is Lexus brand defining technology in Britain

Lexus LS 600hL

There’s all sorts of interesting information in this BBC article about Sainsbury’s chief executive Justin King trading in his Maserati Quattroporte for a Lexus LS 600hL, particularly when it comes to the state of Lexus in the UK:

Lexus has gone from strength to strength with its hybrid-powered luxury.

In the current atmosphere, its new environmental credentials have done what its reputation for reliability and refinement had failed to do for years, namely give the marque emotional appeal.

In recent months, the Japanese carmaker has won over a string of high level executive – including Mr King’s main rival, Tesco chief Sir Terry Leahy – as well as many celebrities, including Sir Paul McCartney and his daughter Stella.

Demand for hybrid Lexus models created a six-month waiting list for the 600h before its launch in October last year, a situation previously unheard of for Lexus, which even after two decades of trying has failed to sell much more than 50,000 cars per year in Europe.

Last year, almost a third of its sales in Europe were hybrids.

“Hybrid is Lexus brand defining technology,” a company official says. “Only Lexus has hybrid, and we have three while others have yet to launch one.”

Lexus is certainly winning over the right sort of customer in Britain, which is sure to do more for the brand than police force fleet sales.