Lexus October 2018 Sales Report

krew

I have to think the biggest focus for Lexus right now is expanding into global markets at the cost of ignoring the American consumer. The UX is a great case in point -- only 20,000 annual sales are expected in the USA, while it's likely to become the top selling model in Europe.

The improvements Lexus can make in the USA are minor -- the ES is starting slow, but I have faith in that product. The RX is going to jump with its upcoming midcycle refresh. Despite low projections, the UX will add to the bottom line. I don't really see Lexus dropping below 20k units, but I also don't think we're going to see massive growth.

But in China, sales are rapidly increasing. Europe expects to hit 100k in sales next year. These are two huge markets, and Lexus is determined to establish itself in both.



There's something scary and smart about the continued lifestyle-ification of the Lexus brand. The longterm play is to make the vehicles secondary to the experience of owning a Lexus, whatever the hell that means. I also think Lexus believes all enthusiasts will be appeased with the introduction of the LS F & LC F. Whether that works out or not, I have no idea.

It is absurd that they decided to invest resources into extreme low-volume models like LC F & LS F and refuse to come out with a whole new GS.
Just because a model won't sell does not mean it should be given up easily. The Germans show dedication to niche models even if they don't sell.
You have to keep making improvements to attract people to buy your products, because that is how you build reputation upon your brand.

Here in Portugal Lexus has a low volume, but this year they've been pushing harder (more marketing, one more store) and they are untill October +30% YoY.

sl0519

It is absurd that they decided to invest resources into extreme low-volume models like LC F & LS F and refuse to come out with a whole new GS.

You have to keep making improvements to attract people to buy your products, because that is how you build reputation upon your brand.

Lexus believes they have come out with "a whole new GS", and it's called the 2019 ES. There was no way the brand could continue with two mid-size sedans, and unfortunately for us, they chose the one that actually sells well.

Will1991

Here in Portugal Lexus has a low volume, but this year they've been pushing harder (more marketing, one more store) and they are untill October +30% YoY.

Their hybrid strategy has been working very well out of USA. Contrary to what Tesla fanboys claim, the rise of EVs reinforced the strength of hybrids, not spell doom for them.

krew

I have to think the biggest focus for Lexus right now is expanding into global markets at the cost of ignoring the American consumer. The UX is a great case in point -- only 20,000 annual sales are expected in the USA, while it's likely to become the top selling model in Europe.

The improvements Lexus can make in the USA are minor -- the ES is starting slow, but I have faith in that product. The RX is going to jump with its upcoming midcycle refresh. Despite low projections, the UX will add to the bottom line. I don't really see Lexus dropping below 20k units, but I also don't think we're going to see massive growth.

But in China, sales are rapidly increasing. Europe expects to hit 100k in sales next year. These are two huge markets, and Lexus is determined to establish itself in both.

TMC record profits from Q1, announced few days ago should tell us everything about their strategy... they even specifically mentioned they will not incentivise slow selling cars but rather better margined ones, so this is why you will see less support for cars at TMC when it comes to $$$ on the hood... their incentives in US are down vs all the competition.

So yeah, they will not fight with $$$ to keep sales high of cars that dont sell well....

And they already said that they see 300k as where they wanted to be for Lexus brand in the US, so now they are optimizing profit, all their average selling values have been going up, just compare LS and RX vs older gens.

sl0519

It is absurd that they decided to invest resources into extreme low-volume models like LC F & LS F and refuse to come out with a whole new GS.
Just because a model won't sell does not mean it should be given up easily. The Germans show dedication to niche models even if they don't sell.
You have to keep making improvements to attract people to buy your products, because that is how you build reputation upon your brand.

Germans are looking to kill a lot of their vehicles, and have delayed refreshes on many, even worse than Lexus. Even 3 series, while good selling, had long generation, 1 series even worse.

5 series is their Camry, cant compare it to GS which was a niche vehicle... It is comparable to RX as to its value to the brand, and Lexus will always fight for their RX.

Gecko

Great post - all true.

One other thing that you nailed: There is already mounting pressure on consumer buying power and softening sales in the new market, but the impact on the auto industry will be much worse in 12-18 months as interest rates continue to rise and economic growth slows. Coincidentally, this is when Lexus will be launching refreshed GX, LC F, LS F and then later, LQ and LX. Just another instance of sitting on your hands for so long that they basically fall off. I can't believe how Lexus gets these things so wrong... it is shocking for the world's largest auto maker.

Lexus is a self-fulfilling prophecy. They subconsciously decide to kill off certain models and then blame everything else but their own product planning. It's amazing to me.

So if Lexus renewed all their vehicles 2-3 years ago, what would they do in 2020? TMC is not largest auto maker, just by far the most profitable one. So I guess they know what they are doing, despite me and you wanting every vehicle renewed every 3 years.

ssun30

Lexus is still undisputedly the king of crossovers, despite its crossover lineup looking more and more vulnerable as competitors catch up. They are very slow with their crossover lineup expansion and is risking launching the LQ and next-gen LX into a weaker global economy. They are still plagued with the culture that they need to see a real demand before green-lighting any expansion. That's the true crisis lying ahead.

I understand all of the arguments for lack of model diversity but these things need to be look at from the lens of minimum 5 year development periods.

Things really started heating up for Lexus starting with the LS and LC and I think from there we can start seeing more interesting strategies being deployed.

As for competitiveness, thats really subjective. Competition is high right now, I see Lexus slipping up here and there but for the most part the same things they were competitive for in the past remains true today. Value, reliability, and comfort. Except they added another new trait to their company mantra, driving experience. I think we can all say that the enhanced "driving experience" aspect has played as a strong suit for Lexus as many automotive reviews have been pleasantly surprised by the new direction. So what is Lexus really lacking? Please don't say the infotainment, that horse has been beaten to death already.

Lexus still maintains sales growth more or less with MB and BMW and they will all finish around the same way that they've been finishing the last few years. It doesn't mean Lexus is weaker, it just means the preference for their models have been changing priority with buyers. No big deal, keep on hustling.

spwolf

So if Lexus renewed all their vehicles 2-3 years ago, what would they do in 2020? TMC is not largest auto maker, just by far the most profitable one. So I guess they know what they are doing, despite me and you wanting every vehicle renewed every 3 years.

You are missing the point. GX will be 10 years old when it is refreshed next year. No news on LX/Land Cruiser replacement, and they are even older. This is simply poor product planning and in the near future, the market is going to soften making sales of these expensive vehicles even harder. Lexus is losing the great market they would have had if either of those vehicles were on any reasonable product plan.

Even without these models, there should be plenty to do in 2020 - new NX, RX refresh, should be new IS, etc.

Gecko

You are missing the point. GX will be 10 years old when it is refreshed next year. No news on LX/Land Cruiser replacement, and they are even older. This is simply poor product planning and in the near future, the market is going to soften making sales of these expensive vehicles even harder.

This would be a good argument if the GX wasn't consistently selling 2k a month. I'd say it's excellent product planning from a financial perspective. As for the LX/LC, they've always run a little long between generations and both have had numerous refreshes -- at least they both look modern. :D

krew

This would be a good argument if the GX wasn't consistently selling 2k a month. I'd say it's excellent product planning from a financial perspective. As for the LX/LC, they've always run a little long between generations and both have had numerous refreshes -- at least they both look modern. :D

Selling 2k a month in a market that's dramatically risen towards CUVs (read: GX has been flat since 2014) is not really "excellent product planning." Lexus has the market cornered for BOF the same way Toyota does with the 4Runner, and there's a niche demand for that type of vehicle. Financially, yes, Toyota has been reaping the benefits but the GX is well overdue for a new engine, interior, and updated safety systems and this has been common knowledge since ~2016 or so. Coincidentally, they'll actually deliver on those things... right when the market starts to contract/decline. Too bad it couldn't have been in 2016 or 2017... they would have probably been selling 3k+ of them a month if so.

Gecko

You are missing the point. GX will be 10 years old when it is refreshed next year. No news on LX/Land Cruiser replacement, and they are even older. This is simply poor product planning and in the near future, the market is going to soften making sales of these expensive vehicles even harder. Lexus is losing the great market they would have had if either of those vehicles were on any reasonable product plan.

Even without these models, there should be plenty to do in 2020 - new NX, RX refresh, should be new IS, etc.

And they are being very profitable on both GX and LX right now... actually for them, market is down since GCC market is down, so it makes sense to delay a bit.

If they did new versions in 2016, they would be missing many features of new versions coming in 2021 or whenever.

Gecko

You are missing the point. GX will be 10 years old when it is refreshed next year. No news on LX/Land Cruiser replacement, and they are even older.

According to timetables posted here by Carmaker1, 4LX / Land Cruiser 300 go into production sometime between July and September 2020 for a 2021 model year launch.

Gecko

Even without these models, there should be plenty to do in 2020 - new NX, RX refresh, should be new IS, etc.

Of that trio, the RX refresh goes on sale next year for the 2020 model year. The others (2NX and 4IS) are on a similar schedule to 4LX (July 2020 start of production for 2021 model year).

Gecko

Selling 2k a month in a market that's dramatically risen towards CUVs (read: GX has been flat since 2014) is not really "excellent product planning." Lexus has the market cornered for BOF the same way Toyota does with the 4Runner, and there's a niche demand for that type of vehicle. Financially, yes, Toyota has been reaping the benefits but the GX is well overdue for a new engine, interior, and updated safety systems and this has been common knowledge since ~2016 or so. Coincidentally, they'll actually deliver on those things... right when the market starts to contract/decline. Too bad it couldn't have been in 2016 or 2017... they would have probably been selling 3k+ of them a month if so.

As an enthusiast I'd love to see a brand new GX and can't wait, which we already know is being developed. As a pragmatist, the sales numbers are pretty self-explanatory.

A case for 3GX can't even make itself. At this point Lexus is bringing us the 3rd gen just for kicks. :cool: