No Plans to Build Lexus Vehicles in China

Lexus Manufacturing China

Lexus continues to hold off on plans to manufacture vehicles in China, and it may be decades before brand executives change their mind — from Bloomberg:

“There’s too much quality risk in China to produce there,” Takashi Yamamoto, executive vice president of Lexus International and an engineer who’s worked at Toyota for 33 years. The company also still has to improve the brand’s awareness and standing among consumers. “When that difficulty is gone, maybe local production is likely to be launched in China, maybe several decades later,” he said.

While Lexus set an annual global sales record of 583,000 vehicles last year, less than 15 percent of deliveries were in China. BMW sold more vehicles in China than Lexus did worldwide in 2014.

The import fees that Lexus must add to their pricing compared to locally-built BMW, Audi, and Mercedes vehicles puts the brand at a severe disadvantage — for example, the IS sedan starts at 369,000 yuan ($58,200), a premium of about 30 percent over the BMW 3-Series and 35 percent more than the Audi A4.

The Lexus decision also contrasts against recent quality studies of China-built vehicles:

New-vehicle owners reported 105 problems per 100 vehicles in J.D. Power’s China initial quality study, released last week. The number of problems reported has fallen from 168 in 2010, and was lower than the 112 industry average for the U.S. market this year.