Lexus Has No Plans to Manufacture Vehicles in China

Lexus Manufacturing China

According to Lexus International vice-president Mark Templin, there are no plans to start manufacturing vehicles in China:

“We don’t have those conversations,” Templin said. “We haven’t gotten to the point where we have serious conversations about building cars in China yet.”

The immediate priority is building the brand in the country, where German badges are coveted as the epitome of premium and Japanese brands have often been shunned because of political tensions between the governments in Beijing and Tokyo.

“We’re only 10 years into the China market right now,” Templin said. “We’re worrying about developing the brand, making sure people know what we stand for, rolling out a dealer network that’s capable of taking care of customers.”

Lexus has a real chicken-or-the-egg situation happening in China — not enough consumer interest to justify building a factory, but prices too high to generate consumer interest. Lexus will have to invest eventually, but sales will have to increase before it makes financial sense.

For some perspective, here’s a breakdown of the 2013 sales:

In calendar year 2013, Lexus sold around 73,000 vehicles in China, 13 percent more than the year before. It sells every model in its lineup there except the HS hybrid.

By comparison, Audi, the luxury leader in China, sold 492,000 vehicles there in 2013, a gain of 21 percent. BMW’s 2013 China sales rose 20 percent to 391,000, while Mercedes-Benz sales rose 11 percent to 218,045.

[Source: Automotive News]