Hybrids (Still) Central to Lexus Strategy in Europe

Lexus Hybrid Drive

For whatever reason, Business Week has become particularly concerned with how Lexus is doing in other parts of the world. First there was an article a couple weeks ago about the company’s sales in Japan (which I partially refuted), and now a new story has sprung up about how hybrid technology may be the key to Lexus improving their status in Europe:

Lexus sold only about 39,000 cars in Western and Eastern Europe in 2007, compared to 730,000 for the Mercedes brand and 700,000 for BMW.

Already sales of Lexus’ three hybrid models—the GS 450h and LS 600h sedans, and the RX 400h sport-utility vehicle—accounted for 31% of total Lexus sales in Europe in 2007, up from 26% in 2006. Among Lexus SUVs it’s 85%. “Hybrid has been our breakthrough,” says Schlicht.

The gasoline-electric powertrain helps address one of Lexus’ main problems in Europe. Because of the brand’s focus on the gasoline-oriented U.S. market, it has a much narrower range of diesel-powered models than do BMW and Mercedes. “We don’t want to copy the Germans. They’re good at what they do,” says Schlicht. “We want to find our own way.”

For anyone following Lexus in any way, this is old news, it’s quite clear that hybrids are going to make or break Lexus in Europe. At first, I was slightly confused why Business Week would even bother covering it…until I realized it’s a general business publication, tasked with giving broad overviews. Under that perspective, it makes total sense.