Can this man finally deliver 'Lexus Envy'?
Toyota's luxury line turns to yachts, skyjets and coupes to catch up to Germans
March 26, 2017 - Hans Greimel - Automotive News
TOKYO -- Lexus has the quality, customer service and technology. But it still lacks one thing that its German luxury competitors have: cadres of ogling wannabes who are jealous of the driver.
"When you're stuck in traffic, people look at the driver in the Mercedes as a person who has made it in society, and they will envy you," concedes outgoing Lexus International President Tokuo Fukuichi. "We haven't fully achieved that compared with the German three."
Call it "Lexus envy." Lexus now wants to finally possess it with a new multipronged branding push to sharpen its image as a lifestyle brand and further distance it from mass-market Toyota.
The campaign starts with a newly appointed chief branding officer -- Fukuichi himself.
Fukuichi will step down as president of Lexus International Co. on April 1 and take the newly created position of chief branding officer at Toyota Motor Corp. for Lexus and Toyota brands. Yoshihiro Sawa, Lexus executive vice president, will succeed him as global Lexus boss.
In his new role, Fukuichi wants to light up the Lexus identity.
The Tokyo media launch of the new Lexus LC gave clues to a more glamorous Lexus on the way. The sexy racer sits atop the lineup as beautiful eye candy with the street cred to match. It will sell for ¥13 million (about $115,650 at current exchange rates) in Japan and $92,995 including shipping, in the U.S., which should help burnish a premium brand that has lacked a halo car since LFA production ended in 2012.
Also on display was the sleek and bronze Lexus Sport Yacht, a high-end design exercise unveiled in January in Miami that screams privilege and exclusivity. The carbon-fiber vessel harnesses the power of twin 5.0-liter V-8 engines, based on the 2UR-GSE performance engine of the Lexus RC F coupe.
So was a mock-up of the single-seat white-and-blue Skyjet -- the Lexus-branded spaceship prop that will be featured in the upcoming science fiction movie Valerian and the City of a Thousand Planets. The film is set 700 years in the future -- a big-screen testimony to Lexus' wager on its long-lasting luxury legacy. Clearly visible on the movie prop is Lexus' trademark spindle grille and logo.
Even the media event itself evidenced a grander Lexus branding. The reveal was a rare glitz fest for Japan's auto industry, with techno music, mood lighting and waiters serving finger foods -- a departure from the more businesslike tradition of drab PowerPoint programs.
The ever-spritely Fukuichi, 65, was decked out in a loud pink polka-dot tie and a shirt with a black-and-white tablecloth-patterned collar.
Toyota President Akio Toyoda has given Fukuichi latitude to tackle any issue related to branding in his new role, from product planning and technology to marketing and advertising.
"I'm able to do whatever I want," said Fukuichi, who will continue in the additional role of the automaker's head of advanced design.
He now will be the final arbiter of outward image for all things Lexus and Toyota.
He says it is crucial that Lexus escape the perception of being just Toyota-Plus, bemoaning people who buy aftermarket Lexus grilles to slap on their downmarket Toyotas.
The problem was partly self-inflicted, he says, with platform sharing and thinly disguised rebadging between the brands, such as the Lexus HS and Toyota Sai hybrid siblings. Lexus has traditionally been the entry point for pricey new technology that then trickles down into Toyota.
That all blurs the brands and makes Lexus less coveted.
"Let's clearly define Lexus and wait and decide that some things can only be Lexus and not applied to Toyota," Fukuichi said. "I would like to clarify that sort of distinction."
Lexus' relentless pursuit of the Germans has been hard-fought and fitful.
In the U.S., the younger Japanese challenger was long the luxury-segment sales leader. But more recently, Mercedes-Benz and BMW have dueled each other for that distinction. Their U.S. sales were up through February, while Lexus volume tumbled 23 percent in the first two months to land Lexus in a distant third place.
On the global stage, Lexus fares even worse against its storied German competitors.
"The main thing the German brands have going for them is history and a long stream of good models," says Chris Richter, an auto analyst at CLSA Asia-Pacific Markets.
While Lexus routinely tops the charts for durability and customer satisfaction, it still fetches much lower transaction prices than the Germans, according to Kelley Blue Book.
In a Kelley Blue Book shopper survey of perceived luxury, Lexus outscored BMW and Audi and was ranked alongside Aston Martin and Porsche. But it still trailed Mercedes.
"Lexus' strengths such as quality and service can't be fully appreciated unless you're in the car driving," Fukuichi said. "Better quality isn't that necessary. Better brand power is."
As a design guy, Fukuichi fully appreciates the power of presentation.
It is part of a corporate vision that sees Lexus eventually wielding a kind of snob factor on a par with the Germans.
"After you purchase a Lexus, your whole lifestyle changes. The people you meet and circulate with change," he said. "That means with just one car, your total life image will change."
The price of premium
Lexus U.S. transaction prices rose in February from a year earlier, but lag luxury competitors.
Feb. 2017 / Feb. 2016 % / change
Lexus $48,274 / $47,631 /+ 1.40%
Audi $51,973 / $49,378 / +5.30%
BMW $53,316 / $54,009 / +1.30%
Mercedes / $55,614 / $56,725 / –2.0%
Cadillac / $58,486 / $57,518 / + 1.70%
Overall industry +2.50%
Source: Kelley Blue Book
