Lexus Manufacturing Status Update

Lexus Manufacturing Update

Lexus USA general manager Mark Templin gave an update on the state of Lexus manufacturing at a recent media event in Chicago — here are the salient details, as quoted from Reuters:

Templin said the Cambridge, Ontario plant that makes the RX 350 will be back at full capacity in September.

Most Japanese plants assembling Lexus models have already returned to full strength.

However, the RX 450h hybrid SUV will not be at full production until October. The hybrid is typically 15 percent to 20 percent of RX sales in the U.S. market.

Lexus U.S. sales fell 38 percent in June as dealers ran out of key products. At the end of the month, dealers had about half their normal stock.

“June was the bottom of the trough, and we’ve turned the corner. We see the rest of the year being much better for us,” Templin said, speaking to reporters at a Lexus media event in Chicago.

This is the most definitive answer we’ve seen yet. The fact that dealerships were running at 50% capacity in June should have ended the argument as to why Lexus sales are down, but strangely enough, this isn’t the case at all — here’s another quote from Reuters:

Industry analyst Aaron Bragman of IHS Automotive Insight said on Friday the slump at Lexus goes deeper than a shortage of vehicles. He suggested that Lexus could suffer from the same stigma as did General Motors Co’s Buick brand for the past several decades: old people’s car.

Bragman said it would be “quite a challenge” for Lexus to reclaim No. 1 in luxury sales in 2012 even with full production because its lineup is not as alluring as it once was and it relies heavily on two models, the RX 350 and ES 350 sedan, a spinoff of the Toyota Camry.

The RX so far this year accounts for 45 percent of Lexus U.S. sales and the ES sedan 19 percent.

“Like Toyota, they’ve lost their momentum. They have an aging buyer base, and a lot of their dealers are afraid they will become the next Buick. Their new products haven’t resonated with younger buyers.”

No question, Lexus has lost a step with last year’s recalls and this year’s production woes, but I wonder about Mr. Bragman’s analysis, especially when it discounts the introduction of new updated models. It’s difficult to accurately predict what’s coming when, but there’s definitely the new GS in the pipeline, and I wouldn’t be surprised to see the next-generation ES some time in 2012 as well (and that’s just my “safe” bets — there’s certainly other possibilities as well).

This idea that Lexus is somehow comparable to Buick confuses me. There were so many fundamental issues with how GM handled Buick, and it went way beyond what’s happening at Lexus. Models like the CT 200h will go a long way in reducing the average Lexus buyer’s age.

As to whether the days of being No. 1 in the United States are over, here’s what Mark Templin had to say:

Templin shrugged off the significance of losing the luxury sales crown, and when asked if Lexus could reclaim the top spot in 2012, he said.

“Whether we’re No. 1 or not, I don’t care. We’ve never focused on that. We won’t change our plan mid-year because someone else is selling more cars than us.”

Read the full Reuters Article