USA

No Immediate Plans for Lexus USA Vehicle Subscription Service

Lexus UX Subscription

Lexus USA has no immediate plans to launch a vehicle subscription program, despite initiatives from competitors like Mercedes and BMW — from Automotive News:

As long as the payoffs remain unclear, Lexus isn’t going to “panic and jump in just to jump in,” said Cooper Ericksen, Lexus’ vice president of marketing.

“I think there’s a lot of unanswered questions about how you take a depreciating asset and have a revenue model that is good for the consumer and good for the brand over the long term of that asset,” he told Automotive News on the sidelines of the Los Angeles Auto Show.

Ericksen mentions a general resistance to the idea from dealerships:

“The most consistent feedback we get from dealers on the idea of subscriptions is: ‘Please don’t take away our ability to have this one-on-one relationship with a guest. We value that, and we want to maintain that,’ ” he said.

“Some brands are taking the Tier 1 approach of, ‘We’ll handle everything, and you deliver the vehicle,’ and I don’t think that’s a road we’re going to go down,” Ericksen said.

The Lexus UX will be available with a new leasing program when it arrives in American dealerships later this year. Called Lexus Complete Lease, the new program will be a two-year lease that includes both insurance and maintenance in the price.

The Complete Lease program will launch in Boston, Chicago, Los Angeles & Miami before expanding into other markets. There is no vehicle “swapping”, so leasers will remain in the same UX through the two years. Mileage is limited to 20,000 miles in total.

Comments
To me subscription means I get to hot swap the vehicles like Porsche of Atlanta is doing. Everything else is a tart up lease.
GTG
I believe that 350 to 400 would be the right area Lexus would need to be with this subscription. If it was 500 max, then okay . The Volvo XC 40 is a bigger vehicle than the UX . Thats why my variation is lower than 600 to 700 which is the cost of the XC40 . At the time the UX comes out , it will be a top seller because of December. You are right there will be more changes to come to the subscription service or services. The December to remember sale will also come with incentives. XC40 subscription service has zero down , if Lexus adopted this with a lower price , there winning. I live in New York City and more for less is big here especially when the price for something is less than 500 then it really becomes affordable here, plus it would fit anywhere you park it . 11 million people live in this city and about 6 million have a license just in the city . Every thing cost more here , so a flat and low free , oh fee, that Newyorkers or any other major city can get with out paying an arm and a leg in insurance would be great . I have seen some people’s car insurance here and it is out of this world .
It is not going to be cheaper than Volvo that costs about the same. It is not going to be cheaper than you getting a great lease deal and good insurance deal on your own.

Otherwise they would not be doing it... it is an value added service.
T
spwolf
It is not going to be cheaper than Volvo that costs about the same. It is not going to be cheaper than you getting a great lease deal and good insurance deal on your own.

Otherwise they would not be doing it... it is an value added service.
Agreed, with the only caveat being that the insurance portion of it might end up being cheaper if you live in an area with extraordinarily high insurance rates. There’s nothing to say that they may not offer the program in such cases either. At the end of the day, it’s really just a modified take on leasing. They still have to cover any costs of depreciation and make sure there’s plenty of profit built in. If it’s anything like Volvo as well, you don’t really get a chance to negotiate on price.
And of course 20k UX projection is super conservative. Could the UX put Lexus to #1?

For the Lexus subscription model, makes a ton of sense to get more customer satisfaction style usage out of the cars already being loaner'd out anyways. Most people getting this plan, I assume is going to be young since thats who they are targeting (the sharing economy).

Thoughts?
  • GTG
    GTG
  • April 10, 2018
I saw someone say the NX is cheaper than the XC40 , no it’s not on a lease . The lease price is different from what I was talking about . The price that I was talking about was including full coverage insurance for the subscription . Let’s remember that no money down is savings and that could be what you pay for the car for a year so you are already saving money . Leasing only saves money if your credit is 760 to 800 and whatever, so your down payment is less added with a relationship with the brand and time of year with the model you want . It would be less hassle to do a subscription but you still need good credit .
Insurance, maintenance included.
Now that's intriguing. I love the idea of simplicity with everything included, but of course I fear the price premium.
TheNerdyPotato
Now that's intriguing. I love the idea of simplicity with everything included, but of course I fear the price premium.
The insurance aspect is most interesting, Lexus could get corporate mass association pricing.

It would be even better if they broke down the various costs in the "Lexus Complete Lease" price so people could find out if they're saving anything over their own insurance.

They are definitely on the right track, giving people flexibility in the time of their lease so they don't have to commit too hard on the UX and keeping all maint. in house so the residual has a better shot. Everyone wins.
20k miles is nothing really.
mediumhot
20k miles is nothing really.
Agreed. 10k miles/year is definitely on the low end.

Interesting that the rumored UX-based subscription program (most closely resembling Volvo's XC40 offering) morphed into an insurance-inclusive 2-year lease with a couple of additional oil changes thrown in. (Free 5000 and 10,000-mile oil changes are already included on all new Lexus vehicles in the U.S., so this just adds the broader 15,000-mile maintenance and 20,000-mile oil change to what the Complete Lease includes).
Joaquin Ruhi
Agreed. 10k miles/year is definitely on the low end.

Interesting that the rumored UX-based subscription program (most closely resembling Volvo's XC40 offering) morphed into an insurance-inclusive 2-year lease with a couple of additional oil changes thrown in. (Free 5000 and 10,000-mile oil changes are already included on all new Lexus vehicles in the U.S., so this just adds the broader 15,000-mile maintenance and 20,000-mile oil change to what the Complete Lease includes).
yes, what else could it be?
so again we know nothing about pricing?
Automotive News spoke with Lexus' vice president of marketing Cooper Ericksen about Complete Lease and subscription plans in general:

Lexus willing to wait on subscriptions
December 1, 2018
Krishnan M. Anantharaman

LOS ANGELES — Lexus is in no rush to run a brandwide vehicle subscription program, but it is open to expanding an all-inclusive short-term lease beyond tests on its new UX small crossover.

Subscription programs across the industry are very much in the experimental phase, with luxury brands such as Mercedes-Benz, Porsche, BMW and Volvo testing varying formats and service tiers. Meanwhile, Cadillac suspended its Book by Cadillac subscription experiment in November as subscriber rolls dwindled, with plans to revive it next year.

As long as the payoffs remain unclear, Lexus isn't going to "panic and jump in just to jump in," said Cooper Ericksen, Lexus' vice president of marketing.

"I think there's a lot of unanswered questions about how you take a depreciating asset and have a revenue model that is good for the consumer and good for the brand over the long term of that asset," he told Automotive News on the sidelines of the Los Angeles Auto Show.

Besides, he said, Lexus dealers and customers aren't really clamoring for it, though some dealership groups are launching their own programs across multiple brands.

"The most consistent feedback we get from dealers on the idea of subscriptions is: 'Please don't take away our ability to have this one-on-one relationship with a guest. We value that, and we want to maintain that,' " he said.

"Some brands are taking the Tier 1 approach of, 'We'll handle everything, and you deliver the vehicle,' and I don't think that's a road we're going to go down," Ericksen said.

That said, Lexus continues to explore alternatives to traditional ownership or leasing, such as the Lexus Complete Lease pilot program that will be offered on the UX in certain markets. It combines a two-year, 20,000-mile lease with insurance, maintenance, tire-and-wheel protection and telematics services in one payment, with dealers setting the final price.

"It comes down to a guest convenience standpoint," Ericksen said. "It's not necessarily a way for a guest to pay less for their car or less for their insurance. It's a way for them to have a more convenient way to have transportation that's simpler and less time-consuming and less stressful."

The UX's younger target demographic makes the Complete Lease a good fit, Ericksen said, because those consumers are more accustomed to subscription-based services and packages in other industries, and they're less likely than Lexus' traditional customers to have longstanding relationships with an insurance agent or provider.

But the convenience of a single payment could easily sell well across demographic groups. "We're doing this with the idea that we would expand it to other models down the road if guests view it as a benefit," Ericksen said.

http://www.autonews.com/article/201...e-lease?utm_source=dlvr.it&utm_medium=twitter
C
"It comes down to a guest convenience standpoint," Ericksen said. "It's not necessarily a way for a guest to pay less for their car or less for their insurance. It's a way for them to have a more convenient way to have transportation that's simpler and less time-consuming and less stressful."

This statement is the issue I have with the subscription model. If the overall cost is not similar to the total of the 1. lease, 2. maintenance (which is really one oil change you'd pay after the first complimentary one in a 2-year ownership), 3. my own insurance premium, then why is the selling point just on convenience? In other words, how inconvenient is it really for someone today to pick up the phone or go online to either renew or perform the one time setup with their insurance on the lease of the new vehicle? How much is someone willing to pay extra for having Lexus take car of this one time paperwork and do the two oil changes for you all included in one monthly payment? For me, not more than perhaps a couple $ more per month to save me a couple hours of my time. Seeing the subscription pricing models from the other car manufacturers are significantly steeper than what I'd pay on my own, I understand why Lexus is not diving into this yet.
corradoMR2
"It comes down to a guest convenience standpoint," Ericksen said. "It's not necessarily a way for a guest to pay less for their car or less for their insurance. It's a way for them to have a more convenient way to have transportation that's simpler and less time-consuming and less stressful."

This statement is the issue I have with the subscription model. If the overall cost is not similar to the total of the 1. lease, 2. maintenance (which is really one oil change you'd pay after the first complimentary one in a 2-year ownership), 3. my own insurance premium, then why is the selling point just on convenience? In other words, how inconvenient is it really for someone today to pick up the phone or go online to either renew or perform the one time setup with their insurance on the lease of the new vehicle? How much is someone willing to pay extra for having Lexus take car of this one time paperwork and do the two oil changes for you all included in one monthly payment? For me, not more than perhaps a couple $ more per month to save me a couple hours of my time. Seeing the subscription pricing models from the other car manufacturers are significantly steeper than what I'd pay on my own, I understand why Lexus is not diving into this yet.
indeed... whole premise from start was that this was a premium model, it has to be for them to do it (why would they lose money on it?) but media took it and run it as if it is going to be cheaper and then that led to big disappointment when customer comes in thinking it will be cheaper and it ends up at least 20%-30% more expensive.
zeusus
And of course 20k UX projection is super conservative. Could the UX put Lexus to #1?

For the Lexus subscription model, makes a ton of sense to get more customer satisfaction style usage out of the cars already being loaner'd out anyways. Most people getting this plan, I assume is going to be young since thats who they are targeting (the sharing economy).

Thoughts?
I think the gain in UX sales will be offset by no GS sales and slow IS/LS etc sales....

Funny but internally they don't seem to care as Lexus is #1 with actual registered vehicles, as in sold to actual people and not some of the tricks the Germans are doing with fleet cars etc...
mikeavelli
I think the gain in UX sales will be offset by no GS sales and slow IS/LS etc sales....

Funny but internally they don't seem to care as Lexus is #1 with actual registered vehicles, as in sold to actual people and not some of the tricks the Germans are doing with fleet cars etc...
It should add 15k extra sales per year, GS already sells peanuts....

And yeah, TMC never cared about being #1 in sales... they do care about profits though.
p.s. LS at 900 per month is definitely adding new sales compared to last year. They are obviously fighting for it.
#deadinthewater.

reminds me of all the car share programs and how all media created big hoopla about it and in the end, few billions were lost and nobody talks about in anymore... gotta love the media hype.

S
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