And Mercedes E/CLS and BMW 5 series US sales volume is proof that a lucrative top tier premium mid sixed sedan market exists.
Are they really, though?
A decade ago, the 5 Series and E Class pretty reliably sold around 6k units per month, then it slowly fell to about 5k, and now - before the redesign - the 5 Series was selling 2-3k units a month. Mercedes combined E Class and CLS sales into one number and that is often around 3-5k units. The market is falling overall.
Midsize sedans might still be more lucrative for BMW and Mercedes because they share engines, platforms and tech across the lineup between C-E-S-CLS and 3-5-6-7, but conservative Lexus has always leaned more on Toyota for economies of scale, versus investing in their own premium RWD assets. I've gone on and on about this, but Lexus decided to stop investing in the GS sometime around 2006 and started more heavily investing in the ES. None of us know what the numbers look like on the back end, but there's no doubt that a platform shared with the Camry, Avalon, Sienna, Highlander, etc. is cheaper to produce than one shared only with the IS. So, Toyota started slowly making their case: No V8 GS, carryover V6, no marketing/awareness for the hybrid, limited options sheet, limited production, etc.
11 years ago, I wrote a post on ClubLexus about how Lexus needed a flexible premium RWD architecture that would allow them to scale their best thinking to all of their models - IS, GS, LS, SC (at that time), RX, GX - the same way that BMW and Mercedes do -- instead of "engineering down" by using Toyota products and then trying to make them "good enough" with wood and leather interiors. In a sense, I got what I wanted with GA-L. In another sense, I didn't because we still have FWD ES and RX, and it's looking like the GS is going away.
I believe the new ES is going to be one of the most pivotal Lexus launches in a very long time. Why? They're at a crossroads here, in many different ways. I do believe they'll drop the GS -- it's too hard to justify in this market, and it's reasonable to expect that they could make the ES good enough to fill the gap it leaves behind for at least 75% of owners. Lexus is going to have to either: 1) really rewrite what an "ES" is and turn it into the Lexus version of the Audi A6 or 2) Completely give up the market and continue to build and engineer the ES as a car that is "good enough" for people who think they want a midsize luxury car. Will they use the 2GR-FKS with only 300hp? Will they unveil a new smaller displacement Dynamic Force turbo V6? Will it get a new Dynamic Force 2.0T? Will they use the same outdated, less capable Dynamic Torque Control AWD system... or will they unveil a new active AWD system? Will it get an F-Sport package?
More importantly, what decisions they make here will also translate to the next gen RX. The RX badly needs a 350+hp engine option, but how can they do that with FWD -- or even with DTC AWD? That system is not good enough for 300+ hp applications, and it's certainly not sporty - at all. If Toyota/Lexus is going to rely on FWD for their midsize products, they have to engineer an AWD system that can take higher horsepower applications or they're going to be left behind.
If Lexus can does the following for ES, I will say that I think the retirement of the GS makes sense.
- Base engine: All-new Dynamic Force 2.0T I4 with ~265hp/280lb-ft of torque "ES 300/RX 300" with 8AT
- Optional engine: All-new Dynamic Force 3.0L turbocharged V6 with ~340hp/360lb-ft of torque "ES 400/RX 400" with 10 AT
- Hybrid option for ES: Li-ion Hybrid system from the new Camry LE "ES 300h"
- Hybrid option for RX: Multi-stage hybrid system with new Dynamic Force V6, ~320hp
- Standard front-wheel drive
- Optional active AWD system with torque split that can flex from 50/50 to 30/70 front to rear (Standard on F-Sport V6)
For one, the next RX almost has to have these types of upgrades to be competitive. Two, so does the next generation Lexus midsize sedan, no matter if you call that an ES or a GS.
If you can buy either:
- an ES 400 F Sport with 340hp, 360lb-ft of torque, 10AT, the F Sport package, active all wheel drive, red leather interior option, etc
or
- an ES 300/400 with luxury package including pleated leather, woodgrain, 12" screen, upgraded wheels, Mark Levinson, Lexus Safety Sense +, Panoramic roof, etc
... nobody is going to even care about the GS. And Lexus knows that. The genius in this plan is that they can also sell a $40k FWD ES 300 with base equipment all the way up to a $65k ES 400 F Sport AWD - totally expanding one product line while saving costs on another. It's all about the Benjamins, baby.
Is the 550i M Sport or E43 AMG owner going to be shopping for this car? No, but are they right now? No.
The only qualm I have with this plan is that I think this car should be named "GS" for many reasons - not the least of which is that the GS is already a global product and the ES is not, and the GS is seen as more premium.
Now, if there is no active AWD option for this new ES and Lexus tries to stuff a torquey turbo V6 (or the 2GR-FKS) into an ES FWD or with DTC AWD, they have failed. Period.
(IS-SV, I went off on a tangent here... not directed at you
)