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A Look at Lexus USA’s Strategy

With BMW taking the #1 sales lead in the US and Mercedes not far behind, a new Automotive News story asks “What’s wrong with Lexus?”:

For one thing, company executives admit that they depend too much on RX crossover sales at a time when luxury buyers are seeking smaller cars, including entry-level coupes and convertibles. Lexus officials point out that coupes and convertibles last year accounted for more than one-third of volume for the BMW 3 series, which far outsells Lexus’ IS range.

They say Lexus isn’t attracting enough 25- to 49-year-olds, the age group that flocks to the 3 series.

Now Lexus is battling back with new entry-level models: the IS convertible and a dedicated hybrid. It also plans a new dealer training program and edgy, provocative ads, all in the name of wooing away some of that BMW traffic.

Lexus attracted plenty of 45-year-olds two decades ago when the brand debuted in the United States. And they have remained loyal to the brand, Lexus General Manager Mark Templin says.

“Now those buyers are 65,” he says.

Be sure to read the full story, it’s very candid and especially informative.

The HS 250h could certainly be a defining moment with Lexus—the 1,500 pre-orders in Japan shows the potential for the model, yet there’s no indication just how it will be received here in North America.

But the central problem Lexus’ has with attracting younger buyers can be summed up with two words: No Coupes. As the lineup’s sports-oriented models, both the IS & GS need two-door variants, the IS especially. The IS-C is certainly a step in the right direction, but the next generation design needs incorporate coupe and convertible versions right from the start. There’s no arguing that the IS-C has an awkward look due to being based on a sedan-only model.

There also needs to be more options. Multiple engine choices, F-Sport accessories, wheel choices, interior/exterior colors. (I remember hoping when Lexus General Manager Mark Templin came over from Scion that he would bring the kind of customization seen with that brand.)

Even further, the upcoming GS & IS redesigns are of the upmost importance—they have to be executed extremely well. The second-generation IS is a solid platform to build from, it isn’t hard to picture the next generation being a successful evolution.

The GS, on the other hand, is at a crossroads of sorts. This car needs to be an aspirational model, providing a path for IS owners looking to upgrade, which means the next generation has to deliver an improved driving experience with a more daring exterior design.

In continuing to grow and strengthen their position, Lexus is going to have to take some chances, the HS 250h being the first. There’s no telling what will happen, but it’s shaping up to be an exciting ride.

(Be sure to check out the Club Lexus thread on this topic, very interesting discussion.)

BrandingCompetitorsIn the NewsLexus GS: Third GenerationLexus IS: Second GenerationSales ReportsUSA