Three-Row Crossover a Top Priority for Lexus

[PTien]

I recently read this article of an interview with Jim Lentz on regrets of Lexus not investing on a 3 row crossover SUV vs an image vehicle like the RC.
http://www.autonews.com/article/20150511/OEM02/305119948/lentz-on-lexus-few-regrets

I personally was hoping the new RX would offer a 3rd row option as it was going to be larger than the outgoing model however its seems that's not going to happen.

What's your thoughts on this?
Is Lexus missing out on a lot of opportunity by not having a 3 row crossover SUV? Or was having the RC as the image car a great long term decision?

 

[CIF]

What a brilliant article. Preach Mr. Lentz, preach!

There was SO much valuable information in that article, I just have to quote and highlight a bunch of key points:

...Lexus wouldn't confirm last week whether such a vehicle is under study, but dealers have been clamoring for it. "Third-row seating is the No. 1 issue we hear from dealers," Lexus division chief Jeff Bracken told Automotive News last year. "We feel like we're missing a 35,000-units-a-year opportunity. We're working hard to rectify that."
...
"In the luxury business, chasing volume is not a good strategy," Lentz said, making it clear that Lexus has no plans to follow the Mercedes-Benz CLA and Audi A3 below the $30,000 mark. "Luxury cars cost a certain dollar amount for a reason. I don't want to cheapen my cars just to offer a lease that's $20 a month less."
...
He's happy with the younger buyers the IS sedan is pulling into the Lexus fold and the conquests the entry-level CT hybrid is reaching.

Lexus will approach adding higher priced models to its lineup carefully, Lentz said. "I think at some point it's not sustainable if you end up with just too many body types in your lineup."
...

As for what other new models dealers are asking for in addition to a large three-row crossover, Lentz doesn't miss a beat: "They want everything."

So my thoughts and comments on all of this...

Lexus made the right decision launching the RC first. Lexus desperately needed a proper coupe for many years now, and it was overdue. Is a Lexus 3-row crossover also overdue? Arguably yes it is. However Lexus sorely needed the image boost from the RC. A 3-row crossover provides no such image boost to the brand. A 3-row crossover would be purely a volume addition to the brand, not really an image addition. Also, what dealers want and ask for isn't always what's best for Lexus as a brand.

Also looking at the key points I bolded from the article, we can see that a 3-row crossover definitely IS coming in the future, so no need to worry. All that's needed is some patience.

Additionally, I LOVED all the subtle jabs at the German competition. Everything from not cheapening the brand with entry-level models that are priced too low, to not offering desperate lease deals, to not aggressively expanding the lineup to try and offer a model in every niche possible (whether that niche exists for real or is imagined).

His final point is also important about dealers. Dealers always want everything, always. So I'm glad to see Lexus itself is in firm control of its own destiny, rather than dealers trying to steer the image and direction of the brand.

 

[krew]

krew

In an Automotive News interview, Toyota North America CEO Jim Lentz admits that Lexus missed a sales opportunity by working on the RC coupe rather than a three-row seven-seat crossover.

View the original article post

 

[Lasse J. Nordvik]

Didn't I read somewhere that a three-row version was coming next year?

 

[PTien]

Didn't I read somewhere that a three-row version was coming next year?

Pure rumors...

 

[Tinhinnh]

Is offering a smaller engined ES really cheapening the car? Its still the same car, just more frugal. And its available in other countries but its not cheapened there but its cheapened in the US?? After all, it is base on the "cheaper" Camry/Avalon.

 

[mikeavelli]

Yeah pretty straightforward article. Of course a 3 row crossover would sell more but the RC was a needed addition to diversify a lineup which had no coupes. We all know a 3 ROW CUV is coming. The RC is a must for the lineup, Lexus NEEDED a coupe badly and its selling very well off the bat so not sure how anyone can interpret the RC as an issue or problem unless they are just looking for one.

I assume there is still tons of internal fighting on how best to present a 3 row CUV to the market.

 

[GuoxJason]

Sometimes, Lexus sounds like it is broke and lacks brainpower, which are obviously not true... Confidence, Lexus! CONFIDENCE!

 

[Brooks2IS]

Rest in peace GX460. You will be missed greatly.

 

[mmcartalk]

His final point is also important about dealers. Dealers always want everything, always. So I'm glad to see Lexus itself is in firm control of its own destiny, rather than dealers trying to steer the image and direction of the brand.

Usually, though, dealers want something for a reason......they aren't going to ask for things that they can't sell (in fact, it costs them money to have cars in stock that don't sell within a certain amount of time). And they are usually more in a position to know what day-to-day demand is for certain vehicles (or certain types of vehicles) are than high-level corporate people thousands of miles away in offices.

 

[corradoMR2]

I think the RC was a necessary product to fill in the coupe gap the LFA and SC had in addition to increase the momentum of the popular F / F Sport brands. Not only this enhances competitive image and respect against the sport-bred Germans, it gets more younger and conquest buyers in, building greater loyalty of the brand and increased chances of repeat buyers.

As for the three-row crossover, I bet it's right around the corner for next year as MY 2017. I remember Templin stating 2+ years ago "we are considering a compact crossover" when test mules and the NX moniker was already registered. Execs like to put out smoke screens and here's another example trying to downplay the existence of the 3-row CUV, when in fact the TX moniker was registered a year or so ago. Doesn't guarantee the TX will result in a 3-row crossover but it's possible they're keeping this tight-lipped because they might also still be trying to figure out what to do with the GX.

 

[mmcartalk]

Execs like to put out smoke screens and here's another example trying to downplay the existence of the 3-row CUV, when in fact the TX moniker was registered a year or so ago.

You're correct about smoke screens. They come from more or less the same corporate mentality that makes everything tight-lipped until the major auto shows, and those silly bras and body-tape plastered all over new vehicles being tested....the object of the spy-photographers.

 

[DDas]

I guess we are safe to assume that the GX is basically dead now. I've always wished that Lexus could keep the GX and sell a TX (3-row crossover) alongside it, but I guess that's just them competing for sales against each other. I also thought maybe Lexus could transform the GX into a crossover but still keep its SUV type looks like what Nissan did with the Pathfinder/Infiniti JX/QX(whatever number IDC about). If they do the latter then hopefully it would appeal to both types of buyers. I also prefer the GX name vs TX. I'm not sure I want to own the Lexus Texas, but that's just my opinion,

 

[mmcartalk]

I guess we are safe to assume that the GX is basically dead now. I've always wished that Lexus could keep the GX and sell a TX (3-row crossover) alongside it, but I guess that's just them competing for sales against each other. I also thought maybe Lexus could transform the GX into a crossover but still keep its SUV type looks like what Nissan did with the Pathfinder/Infiniti JX/QX(whatever number IDC about). If they do the latter then hopefully it would appeal to both types of buyers. I also prefer the GX name vs TX. I'm not sure I want to own the Lexus Texas, but that's just my opinion,

The main problem, though, is that Lexus generally doesn't have a need any more for two body-on-frame, truck-based SUVs, even with third-row seats. For years, they have been selling the GX and LX side-by-side at dealerships, but the market just doesn't support it any more. The LX, while not terribly popular here in the U.S., is a big staple (along with the sister Toyota Land Cruiser) in much of the Third World, where many roads and driving conditions are primitive, and a vehicle of the Land/Cruiser/L capability is needed. True, the British Land Rovers also fill that role very well, but many prefer the better build quality and reliability of a Toyota/Lexus product. Lexus, with at least some justification, feels that the current market, worldwide, would better support the LX then the GX, so the GX is more likely to be axed.

 

[Brooks2IS]

I've said it before and I'll say it again... I think the market definitely warrants a place for the GX. The GX (and 4Runner too) is posting strong sales increases. Granted, we aren't talking early 2000's figures, but the GX doubled it's sales last year versus 2011. There are several families, mine included, where a body on frame SUV just works better than any 3 row CUV can. I hope Lexus realizes this. If not, I'll be in line to buy one of the last GX's.

 

[mikeavelli]

I've said it before and I'll say it again... I think the market definitely warrants a place for the GX. The GX (and 4Runner too) is posting strong sales increases. Granted, we aren't talking early 2000's figures, but the GX doubled it's sales last year versus 2011. There are several families, mine included, where a body on frame SUV just works better than any 3 row CUV can. I hope Lexus realizes this. If not, I'll be in line to buy one of the last GX's.

I agree, I think there is a market for boxy, tough, real 4x4s. Mercedes has a G-Wagon that has the same shape for over 30 years. They just added new engines and updates again. There are some that want the image, space and abilities of something like the GX or a Range Rover compared to a CUV.

 

[CIF]

Usually, though, dealers want something for a reason......they aren't going to ask for things that they can't sell (in fact, it costs them money to have cars in stock that don't sell within a certain amount of time). And they are usually more in a position to know what day-to-day demand is for certain vehicles (or certain types of vehicles) are than high-level corporate people thousands of miles away in offices.

Yes, but going back to my point, what dealers want is not necessarily what's best for the brand. Dealers for the most part simply want volume (and profits). Mainly volume though, and the profits that come with that.

 

[mmcartalk]

Yes, but going back to my point, what dealers want is not necessarily what's best for the brand. Dealers for the most part simply want volume (and profits). Mainly volume though, and the profits that come with that.

OK...from that viewpoint, I see what you are saying. Usually, more sales are good for the brand, but there may be some exceptions.

 

[mmcartalk]

I agree, I think there is a market for boxy, tough, real 4x4s. Mercedes has a G-Wagon that has the same shape for over 30 years. They just added new engines and updates again. There are some that want the image, space and abilities of something like the GX or a Range Rover compared to a CUV.

Yes, I agree. And, of course, the big body-on-frame Ford and GM SUVs also sell well.....with a LOT of profit on each one. Seems that the question at Lexus, though, is if the international market for BOTH the LX and GX can be maintained. It's an interesting question (probably beyond my own ability to answer it) ...and not surprising that it's one of the issues that Lentz has to deal with.

Excellent thread, BTW.

 

[mikeavelli]

Excellent thread, BTW.

Some amazing people bringing some real intellect here. I agree great thread(s)!