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Toyota Mulls Overseas Production of More Lexus Models Due to Strong Yen

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Old 03-12-12, 06:04 AM   #1
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Default Toyota Mulls Overseas Production of More Lexus Models Due to Strong Yen


SEOUL (Dow Jones)--Toyota Motor Corp. (7203.TO) is considering building more Lexus models outside Japan as the yen's strength has made Japan-assembled cars less price-competitive, Toyota's chief engineer, Kanamori Yoshihiko, said at a briefing on Monday.

The only Lexus model that Toyota now builds outside Japan is the Lexus RX sport-utility vehicle, which it manufactures at its Canada plant.

On Monday, Toyota launched three versions of the all-new Lexus sedan in South Korean markets, with an aim to sell 200 units a month this year. The three models are the New GS250 sedan, GS350 sedan and GS F Sport sedan with a price range of KRW59.8 million-KRW77.3 million.

In sharp contrast, the company sold a mere 51 Lexus cars for the whole of 2011.

Japan's largest car maker by sales is considering importing Europe-made Toyota cars to South Korea in addition to imports from the U.S., Toyota Korea Chief Executive Tommy H. Nakabayashi told Dow Jones Newswires late last month.

-By Kyong-Ae Choi, Dow Jones Newswires; 822-3700-1903; kyong-ae.choi@dowjones.com
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Old 06-19-12, 08:30 AM   #2
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Lexus dealers are pressuring parent company Toyota to build the new 2013 ES in North America.

According to Ward's Auto, Tim Morrison, vice president of sales and dealer development, admits dealers are clamoring for the ES to be built in North America to help hedge against a strong Japanese yen. The ES, Lexus' top selling sedan in America, is currently built in Kyushu, Japan. But the strong yen has cut into the car's profitability.

Morrison says that the company's North American factory capacity is already limited, but as the brand looks to expand, it will consider finding places to build the ES overseas.

Last year, Lexus sold 41,000 ES sedans, even with the constraints from production problems following the March tsunami. The redesigned 2013 model will include a hybrid version, which Lexus expects to draw new customers.

The ES remains a strong conquest vehicle for Lexus, with 63% of ES customers new to the brand, Lexus tells Autoblog. However, only 28% stay with the ES once it's time to get a new car.

Last year, Lexus lost its title as America's No. 1 U.S. luxury brand, but officials have said they intend on recapturing it. In 2011, Lexus sold 198,000 vehicles in the U.S., and this year, it hopes to reach 250,000 vehicles.
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Old 06-19-12, 09:02 AM   #3
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Toyota employees in America are very satisfied with their jobs. A well disciplined work environment helps ensure a better quality product in the end. Toyota has one of the best company model structures in the world, which is why examples of their infrastructure is often integrated by other companies.
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Old 06-19-12, 09:37 AM   #4
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63% of ES customers are conquests and only 28% stay when they buy a new car? I really hope a lot of those folks are moving to other Lexus products because if not, those could be very troubling numbers.
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Old 06-19-12, 10:29 AM   #5
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63% of ES customers are conquests and only 28% stay when they buy a new car? I really hope a lot of those folks are moving to other Lexus products because if not, those could be very troubling numbers.
they probably move on to other Lexus of course... Toyota/Lexus has one of the biggest retention rates in the industry.
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Old 06-19-12, 10:38 AM   #6
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Hummm, I really like how that ES looks. If I had the green, I'd consider something like that most definitely. But I'm not sure if I agree with Lexus being built in the US. Unless they can match the same build quality here, (that's where I'm somewhat doubtful), then I think it should stay.
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Old 06-19-12, 11:15 AM   #7
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they probably move on to other Lexus of course... Toyota/Lexus has one of the biggest retention rates in the industry.
The 28% was surprsing. If ES350 owners stay within the brand I wonder what they are buying after the ES?

With an older demographic, it doesn't seem like a lot would move into the IS or GS. The LS is considerably more expensive and a BIG jump in price. Makes you wonder if other entry level luxury brands are benefiting.
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Old 06-19-12, 05:26 PM   #8
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The 28% was surprsing. If ES350 owners stay within the brand I wonder what they are buying after the ES?

With an older demographic, it doesn't seem like a lot would move into the IS or GS. The LS is considerably more expensive and a BIG jump in price. Makes you wonder if other entry level luxury brands are benefiting.
i doubt it as Toyota has among the best retention rates in the industry... and that wouldnt happen if its best seller was losing customers to competition.

I personally never purchased same car twice, especially if it is same version of the car, so I would guess that most people change things around a bit.
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Old 06-20-12, 09:48 AM   #9
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Default What if Lexus ES production shifted from Japan to North America?

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Lexus ES Candidate for N. American Production
Jun. 15, 2012David E. Zoia | WardsAuto

DEARBORN, MI – The entry-level Lexus ES, revamped for the ’13 model year and heavily counted on to boost brand sales and draw first-time buyers, appears a strong contender for North American production, as well.

Toyota has confirmed it is considering sourcing additional Lexus vehicles in the region, but has not said what models are among the leading candidates.

Speaking here at a media backgrounder on Lexus’ newest model, Tim Morrison, vice president-sales and dealer development, says retailers are lobbying hard for a North American-built ES.

“One of the requests we’ve had from our dealer council is to figure out a way to get the ES – or one of our other volume vehicles – here just to blunt the (negative effects of) currency exchange,” he says. “(But) when you look at whether you want to shift production to North America, that’s a very big decision. It’s a lot of money, and there’s timing with changeovers, etc.

“I’m not in those meetings, but I’m sure it’s a conversation that’s taking place. We’re not there yet, but I can tell you it’s coming.”

Morrison says there currently isn’t excess capacity available in North America to add Lexus production, and so far there’s enough capability in Japan to serve all markets.

However, the brand is looking to grow globally, which could cause product allocation to tighten. “That would be a good time to consider North American production,” he says.

The ES currently is built in Kyushu, Japan, and the U.S. market is expected to account for 50% of output, with China taking 30% and Europe 20%, officials say. The U.S. is credited with about 40% of Lexus sales overall.

For the first time since helping to launch the Lexus division in 1989, the ES does not share its basic architecture with the lower-priced Toyota Camry. Instead, this model moves up-market a notch, employing an all-new platform that also will do duty below the skin of the upcoming Toyota Avalon, due to hit the market later this year.

The upscale move, plus the car’s first-ever hybrid powertrain option, is expected to give buyers a reason to migrate to the Lexus brand, which fell from its perch as the U.S.’s No.1 luxury brand last year.

“There are more than 1 million ES buyers on the road today,” Morrison notes. “But we need to look beyond our current customers to hit our goals.”

Those targets include sales of 5,000 ES cars per month in the U.S., once the new model arrives in volume following its August debut, and brand deliveries topping 250,000 vehicles.

Last year, Lexus found buyers for about 41,000 ES sedans, according to WardsAuto data, and total deliveries for the brand surpassed 198,500 vehicles, when a tsunami in Japan and flooding in Thailand limited supplies.

Expected to be the biggest draw for new buyers to the brand is the ES Hybrid, which shares its powertrain with the Camry Hybrid, namely a nickel-metal-hydride battery, 2.5L gasoline engine and electric motors that provide a combined output of 200 hp.

“We think there’s an opportunity here to pull in younger and newer buyers with the hybrid,” Morrison says.

Not disclosed is how many conquest sales Lexus is targeting for the ES, but Morrison says the hybrid model is likely to account for 25% of total sales. “Lexus owners have been looking for a hybrid in the ES,” he says.

To capture more new-to-the-fold customers, the brand will emphasize event marketing – such as sponsorship of this weekend’s U.S. Open golf championship – to put the car smack dab in front of its intended audience and get potential buyers behind the wheel.

“Yes you have to have broadcast TV. Yes you have to have print (and) digital marketing,” Morrison says. “But the engagement marketing is so important to the brand. You have to get these guys into the cars.

“Today’s (ES) buyer typically is a 50- to 60-year-old male,” he adds. “We’re still thrilled to have those buyers, but we want to get more of the younger buyer, closer to that 50-year-old range.”

Because of its price positioning, the entry ES represents Lexus’ best chance at drawing new buyers. But it won’t be easy, Morrison says, noting the number of competitive models available in the segment. “I don’t know how the customer decides what he wants.”

Although overall Lexus sales dropped 13.4% last year as supply shortages hampered the brand, Morrison doesn’t believe customers have abandoned the marque permanently, but will return to as a largely stale showroom is refreshed this year.

Lexus plans to launch nine all-new or highly refreshed models in 2012, including a revamped LS flagship. Not counted among the nine are F-Sport derivatives, which will see the lineup of performance offshoots expanded this summer with a version of the RX cross/utility vehicle.

“As we know in this business, product is king,” Morrison says. “And we were late in the lifecycle on a couple of our vehicles (last year). As the new vehicles come out, we’re having great success.”

The new ES is slightly bigger than the car it replaces, has a sportier appearance and a longer list of luxury and safety features. Seats feature better side bolsters and steering has been quickened from a 16:1 overall ratio to 14.8:1 in an attempt at giving the car more of a performance feel. Its 10 airbags are considered a best-in-class by Lexus.

Safety features include a Lexus first “Rear Cross Traffic Alert” device. It uses the blindspot-detection system to warn of cars approaching at right angles behind the car, so that a driver backing out of a crowded parking spot can avoid collisions with oncoming vehicles.

ES volume will be limited this year, as the car isn’t expected to see widespread availability until the September-October timeframe. But the new entry model’s impact on 2013 sales is expected to be significant.

“It will help dramatically to improve our volume,” Morrison says. “It’s fair to say if (250,000 vehicles) is where we land this year, that will be the low-water mark for next year.”
Source: Wards Auto
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Old 06-20-12, 09:51 AM   #10
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Considering that RX and ES are the best selling Lexus models in the USA, it would make perfect sense. The ES is closely related to Avalon so it would be natural to build it together in Kentucky. But since TMMC manufactures RX, it would also be a worthy plant to build ES.
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Old 07-06-12, 06:20 AM   #11
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MIYAWAKA, Japan, July 6 (Reuters) - Toyota Motor on Friday launched production of its revamped Lexus ES sedan, a flagship luxury car that represents a renewed bet the automaker can keep building cars for the United States and China at more costly factories in Japan.

Toyota, Japan's top automaker, has made it a goal to safeguard production of some 3 million vehicles a year in its home market - roughly triple the equivalent output at Nissan Motor and Honda Motor and about 40% of the cars and trucks Toyota builds globally.

Lexus is key to that commitment. The only Lexus model made outside Japan is the RX sport-utility vehicle manufactured in Ontario, Canada.

"Lexus becomes a product only after the Japanese craftsmanship and technologies are applied, so that's why I want to stick to it being from Japan," said Toyota President Akio Toyoda.

"But our basic philosophy is to make products where there is demand...We may have to shift some production abroad in areas that will continue to grow. But I still believe that keeping a certain level of production in Japan will enable us to catch up to and lead the growth of the global automotive industry," he told a group of reporters after a ceremony marking the ES production launch.

Japanese automakers, including Toyota, have been reeling from a strong yen that has eroded profits on exports. The Lexus strategy leaves the brand more exposed to foreign exchange than Toyota's mainline brand, but Toyota officials said the made-in-Japan strategy would pay off even at current yen levels.

"We have no plans to endure to a point that our business won't function. But for cars like the ES, we are seeing cost levels that will allow us to continue producing even if the yen is at 80 yen against the dollar," said Kazuo Ohara, executive vice president of Lexus International.

"Our policy is to protect manufacturing in Japan as much as possible for as long as possible," Ohara told reporters, but added that the 80 yen level is still tough for Lexus.

Audi, Mercedes-Benz and BMW already make cars in China, where imported luxury vehicles face tariffs of 25%. Nissan plans to start building Infiniti vehicles in China from 2014.

"At some point Toyota may have to move production abroad to compete on the cost front,"
said Masatoshi Nishimoto, the manager of Japan and Korea vehicle forecast at IHS Automotive.

Nishimoto said Toyota could make such a move within 5 years and that the firm must drive sufficient global sales growth in the interim in order for it to keep its high-profile domestic production target and also produce more abroad.

BRAGGING RIGHTS AND BABY BOOMERS

Toyota expects the all-new ES lineup, including a 1st-of-its-kind hybrid option, will drive global sales growth of more than 60% for its top-selling luxury car.

Toyota also sees the launch of the 2013 model as step toward retaking an important bragging right by making Lexus the best-selling luxury brand in the United States, a position it lost in 2011 when the Japan earthquake and tsunami disrupted output.

The new ES will not be sold in Japan.

The redesign of the ES, built on the Toyota Avalon platform, follows a spate of Lexus revamps this year that are part of a push by Toyota to show it can attract consumers younger than the American "baby boomers" who made Lexus a hit in the 1990s.

The ES competes with BMW's 3-Series sedan, Mercedes-Benz's C-class and Infiniti's G sedan. Mercedes-Benz is Daimler's premium car brand and Infiniti is Nissan Motor's luxury brand.

Between January to June this year, Toyota sold about 18,270 ES sedans in the United States, up 10% compared to the same period in 2011, making it the 2nd-best selling Lexus after the RX SUV.

Globally, 74,000 ES vehicles were sold last year, accounting for about 18% of the total number of Lexus models sold.

The ES will go on sale in August. Toyota is aiming to sell about 10,000 ES vehicles a month, including 5,000 in the United States and 3,000 in China, Ohara told reporters.

The ES line, which includes the hybrid option and versions with 2.5-litre and 3.5-litre engines, is likely to be priced around $36,000 to $44,000 in the United States, said Toshio Asahi, a deputy chief engineer at Lexus International.

Last year, Toyota sold 404,000 Lexus vehicles, down from a peak of 518,000 in 2007.
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Old 07-06-12, 06:46 AM   #12
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30% of ES350 sales expected to come from China! Looks like the current trend is expected to continue on this model.
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Old 07-06-12, 07:17 AM   #13
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"Lexus becomes a product only after the Japanese craftsmanship and technologies are applied, so that's why I want to stick to it being from Japan," said Toyota President Akio Toyoda.

"But our basic philosophy is to make products where there is demand...We may have to shift some production abroad in areas that will continue to grow. But I still believe that keeping a certain level of production in Japan will enable us to catch up to and lead the growth of the global automotive industry," he told a group of reporters after a ceremony marking the ES production launch.
Akio.....what a leader!!
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Old 07-06-12, 08:15 AM   #14
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30% of ES350 sales expected to come from China! Looks like the current trend is expected to continue on this model.
rest of it probably from Russia :-).

As they are not sold in Japan or Europe (other than Russia and Ukraine). Too bad, i would be candidate for ES300h here in Europe.
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Old 07-06-12, 08:25 AM   #15
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rest of it probably from Russia :-).

As they are not sold in Japan or Europe (other than Russia and Ukraine). Too bad, i would be candidate for ES300h here in Europe.
Nothing was mentioned in the article, but I wonder if they'd ever consider expanding the number of markets for the ES?
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