Lexus Sales in China 2018

[spwolf]

The increase of Middle-East spec imports seems to confirm this trend. FAW's Prado will never return to the 5k/month level without the old faithful 2.7 and 4.0. The inability to take low quality fuel and lack of spare parts is a recurring complaint among hire drivers in Tibet and Sinkiang.

Of course the increase in amenities and better fuel economy increases its appeal in the east coast, that will surely help with sales. Combined sales of FAW and Middle-East spec imports should stay strong. But FAW-Toyota is ruining its own business here.



305 units per month is barely any. But again, we will see the true potential of 5LS when it receives that ¥100k drop.

Compared to what though? 305 units of LS500h (dont know ratio to V6), for Lexus size in China is roughly comparable to LS sales in USA, and certainly a lot more than EU.

Again, it is more than they sold RX450h, context is the key here.

 

[ssun30]

Compared to what though? 305 units of LS500h (dont know ratio to V6), for Lexus size in China is roughly comparable to LS sales in USA, and certainly a lot more than EU.

Again, it is more than they sold RX450h, context is the key here.

I don't understand your point here. Are you suggesting there's something wrong with the RX450h? Yes there is. The RX450h has severely compromised pricing which is why they barely sell any. Like EU, the Chinese market is in desparate need for a more affordable "RX350h".

 

[maiaramdan]

Honestly, ES will do well in China whether pre or after tariff

 

[amoschen7]

Compared to what though? 305 units of LS500h (dont know ratio to V6), for Lexus size in China is roughly comparable to LS sales in USA, and certainly a lot more than EU.

Again, it is more than they sold RX450h, context is the key here.

Yea, I’d say 305 unit of LS500h is an accomplisment. I’m guessing they are probably selling another 600 units of LS350? That is a real come back for LS in the market.

 

[ssun30]

New numbers are up for May 2018. Due to recent policy change monthly sales are down 58% month-to-month and down 35% year-to-year. However accumulated sales until May for 2018 is up 19.2%. After another weak June and July they should be able to go full throttle towards the 150k target in H2.

I have yet found a model-by-model breakdown of the figures, although I doubt they are relevant considering the context. Could someone post English sources when they become available?

 

[spwolf]

New numbers are up for May 2018. Due to recent policy change monthly sales are down 58% month-to-month and down 35% year-to-year. However accumulated sales until May for 2018 is up 19.2%. After another weak June and July they should be able to go full throttle towards the 150k target in H2.

I have yet found a model-by-model breakdown of the figures, although I doubt they are relevant considering the context. Could someone post English sources when they become available?

sure

 

[spwolf]

New numbers are up for May 2018. Due to recent policy change monthly sales are down 58% month-to-month and down 35% year-to-year. However accumulated sales until May for 2018 is up 19.2%. After another weak June and July they should be able to go full throttle towards the 150k target in H2.

I have yet found a model-by-model breakdown of the figures, although I doubt they are relevant considering the context. Could someone post English sources when they become available?

Toyota sales up 8.6%:

BEIJING (Reuters) - Toyota Motor Corp’s (7203.T) vehicle sales in China rose 8.6 percent in May from a year earlier to 122,400 vehicles, the company said on Tuesday.

 

[ssun30]

With the recent 25% import tax against vehicles made in USA, some manufacturers could be in real trouble, in particular Tesla, which has halted all new orders starting from this week. They still have over two years of backlog, though.

The BMW X5/X6 and MB GLS are made in USA and they could be hit as well. The biggest beneficiary could be JLR and Volvo. Lexus won't be able to take advantage of this because it has nothing to offer in the luxury SUV segment.

Meanwhile, this means the resale value of my JK Wrangler goes up again since the JL will be very expensive...

 

[mikeavelli]

Reduced Import Tariffs in China Should Mean Big Business for Lexus


View the original article post



Done.

Interesting they dropped that tariff 10%. I wonder how the LC and LS are doing in China?

 

[ssun30]

Interesting they dropped that tariff 10%. I wonder how the LC and LS are doing in China?

Currently barely selling any. The tariff drop will take effect after July. Lexus China officially dropped the prices already however dealerships are just reducing incentives on top of that, so buyers are not getting the actual price drop yet.

August might be the first month we see the true competitiveness of the LS. The 500h is cheaper than the 730Li and the S320L...if that doesn't work I don't know what can solve LS's problem. That's the difficulty of the uphill battle Lexus has to fight.

 

[Joaquin Ruhi]

A Nikkei Asian Review article touches upon Lexus' fortunes in China in a post-tariff changes world during the just-ended month of July. I've highlighted in bold the pertinent passages.

Toyota emerges as winner in tariff war, for now
BMW and Tesla struggle as levies raise hurdles to China market
YU NAKAMURA and KOSEI FUKAO, Nikkei staff writers - August 03, 2018

SUZHOU, China/FRANKFURT -- Toyota Motor enjoyed a powerful tailwind in China last month as rivals BMW and Daimler took a serious hit from the escalating trade war between Washington and Beijing.

The Japanese automaker said Thursday its July unit sales in China rose 17% on the year to 127,400 units, marking a monthly record and a fifth straight month of growth. Its Lexus luxury brand soared 37.5% to around 15,000 units. Toyota ships all Lexus models sold in China -- such as the LS, ES and RX -- from Japan.

China in May decided to lower tariffs on imported passenger vehicles to 15% from 25% in a nod to the Donald Trump administration's call to reduce its trade surplus with the U.S. The cut took effect July 1, and Toyota lowered prices of 10 Lexus models the same day, by 27,000 yuan ($3,945) on average.

The Toyota brand, much of which is produced in China and therefore unaffected by the tariff change, also fared well. Corolla sales rose 10% to 34,100 units and the Levin compact sedan gained 22% to 16,900 units. The RAV4 sport utility vehicle ascended 29% to 12,300 units.

Meanwhile, BMW suffered as China raised tariffs on U.S.-built autos to 40% from 15% on July 6 as retaliation against a U.S. tariff increase on Chinese goods. The company said the Chinese levy hike will cost it nearly 300 million euros ($348 million) in 2018.

The German automaker ships more vehicles from the U.S. to China than any other big automaker -- nearly 100,000 units in 2017.

BMW recently raised prices of U.S.-made sport utility vehicles in China -- by 4% for the X5 and 7% for the X6. The company has been shipping the X5 from Thailand since 2016, and likely will amp up that sourcing going forward.

CEO Harald Krueger said at a recent earnings event that the company produces 80% of its Chinese offerings locally and will work to minimize the impact of the tariff increase.

Daimler has been on a rollercoaster ride as the trade war shakes up the world's largest auto market. Many consumers in China held off on vehicle purchases between April and June in anticipation of the July 1 tariff cut to 15%. As the market slowed, Daimler was forced to lower prices during that period. But the 40% tariff hit the company July 6, as Daimler ships popular SUVs from the U.S. to China.

The company is expected to raise prices to pass on the cost increase at least partially. It expects to sales to slow, and profit may suffer as the impact would not be fully absorbed by the price increase.

American electric vehicle specialist Tesla has raised prices by 20% to 30% to reflect the heavy tariff on its vehicles shipped from the U.S.

Imports account for about 1.25 million of the nearly 30 million units of new autos sold in China per year. The trade war is forcing automakers to revisit their China strategies.

https://asia.nikkei.com/Economy/Trade-War/Toyota-emerges-as-winner-in-tariff-war-for-now

 

[ssun30]

The 7ES starts delivery this month. There is little incentive offered on the remaining 6ES yet it keeps posting record sales figures. I'm expecting heavy dealership mark-ups on the 7ES due to the incredible demand.

 

[spwolf]

The 7ES starts delivery this month. There is little incentive offered on the remaining 6ES yet it keeps posting record sales figures. I'm expecting heavy dealership mark-ups on the 7ES due to the incredible demand.

in general, TMC does not let dealers do markups... not sure if it is different in China?

 

[ssun30]

in general, TMC does not let dealers do markups... not sure if it is different in China?

It is a common practice. Most infamous is the Alphard which carries a 25% markup due to short supply of the LHD variant. If you don't pay to get to the front of the 12-month waitlist 4,000 rich Shenzhen businesspeople will.

Here it is almost impossible to buy a brand new top-seller without paying a premium. The FAW RAV4 had on average 5% markup for the first 24 months since it went on sale. Honda is even worse at 15% for the CR-V and Civic in the first 18 months.

 

[ssun30]

August numbers are up. 17,675 units delivered for a 59.2% increase Y2Y. Lexus is crushing Cadillac and JLR with a firm 4th spot in luxury brands (last year it lagged behind Cadillac). All 6ES trims are now offered with zero down payment and 0% APR which makes it a no-brainer in its segment. At this rate they will easily reach the 150k target for 2018 and directly aim for 180k next year with the launch of the UX and a possible refresh of the GX.

The 7ES received over 20,000 pre-orders on the first month. Current backlog is six months with a mark-up of about 10%. Guess I will be getting mine early next year since I am not paying the mark-up. The fully-loaded Executive trim is at very low availability and Lexus is focusing on Premium and Luxury trim deliveries.

 

[mordecai]

ssun30 - where do you think Lexus will fall for full year sales in China?

 

[ssun30]

^^They've passed the 100k mark this August, and this is with three months (April to June) of weak sales due to the tariff drop. September to December are traditionally the strongest months of the year so I expect them to easily crack the 170k mark. If they are to maintain their annual growth rate they should hit 175k (2016->2017 was a 27% increase).

Unlike some other luxury brands who still can't figure out how to manage inventory, a lot of Lexus' growth in China is from their exceptional production and inventory management allowing them to deliver vehicles very efficiently. Despite of this, 7ES deliveries will take a while and the first four months will be tight. UX is planned for the end of the year or even next year so I doubt it will contribute any sales. But next year they will have no trouble hitting 200k with the UX.

 

[spwolf]

Lexus Chinese sales up 59% in August.

Toyota

In August, Toyota boasted a year-on-year jump of 22.6% with 133,000 vehicles delivered in China. Meanwhile, the Japanese automaker's Jan-Aug sales totaled 940,400 units in this country, growing 11.8% over a year ago.

GAC Toyota hit a new high in monthly sales with its August sales surging 47.1% to 54,500 units. From January to August, the joint venture saw its sales jump 21.1% over a year earlier to 361,000 units, finishing 72.2% of the 500,000-unit sales goal.

Toyota's premium car brand Lexus attained a blooming performance with its China sales soaring 59.2% year on year to 17,675 units thanks to the car tariff reduction policy. Meanwhile, its year-to-date China sales have exceeded 100,000 units to 101,602 units, leaping 22.85% from the previous year.

@ssun30 GAC is due to CHR?

 

[ssun30]

August sales breakdown available.
#1 NX 5,116 (3,739 Gas+1,377 Hybrid)
#2 RX 4,376 (3,935 Gas+441 Hybrid)
#3 ES 3,705 (3,680 Gas+25 Hybrid)
#4 IS 2,858
#5 CT 1,068
#6 LX 636
#7 LS 471 (147 Gas+324 Hybrid)
#8 GS 291 (145 Gas+146 Hybrid)
#9 LC500h 25
#10 RC-F 19
#11 GX400 1

>>As expected ES had a weak month due to depletion of 6ES inventory and 7ES production ramp. Due to low availability of the 7ES, IS had a shocking month with 2,858 sold! That is more than the number sold from January to July combined. I hope this is a chance for people to appreciate the IS more, although with its meager rear legroom it will not do well in China anytime soon.
>>The NX and RX are gaining momentum. Although it can be clearly seen the RX really needs a more affordable hybrid. Also, NX could use a better pricing structure to move sales away from the base trim NX200 to better optioned 300 and 300h.
>>CT is holding on. 1068 may not sound like a lot, but that is 1/3 of the Mercedes CLA, the sales leader in compact segment. It is not a star but a consistent seller, so I see no reason to kill it and not build a 2nd Gen.
>>LX continues to have a strong showing. China will overtake U.S. as its second largest market this year. It is crazy how good the LX is business-wise for Lexus, with a selling price higher than the LS and even the LC but the cost of a Land Cruiser. GX was taken off the market for half a year now. It could really need another facelift ASAP. There is no reason to sell one GX a month when they could easily sell a thousand. I say this because Toyota sells over 11,000 Land Cruisers (Prado and LC200) a month, which is more than the Highlander. So there is clearly a large market for the premium versions of these two vehicles. I will say this again: Toyota's lack of faith with their BoF product line and the resulting indecision to redesign or refresh is one of the biggest mistakes they've made in this decade.
>>LS keeps struggling despite Lexus offering incentives of up to RMB 150,000. Compared to original post-tariff-drop prices, now one can basically have the Executive Package plus Kiriko Glass for free. But LS still doesn't sell, and there is no reason it sells even worse than the 4LS, which is LWB. This basically proves my previous predictions of the 5LS: LWB is a must for China.

 

[spwolf]

It is quite interesting to me that NX is still production constrained... Just read that there is 4 month wait for NX in Japan.

Thanks for the numbers, UX should do well.