Akio Takes The Wheel
NEW YORK -- By Akio Toyoda's own admission, his beloved Lexus luxury brand has a big problem.
Unlike its German rivals, Lexus has no heritage, no narrative.
Now the Toyota Motor Corp. president is investing himself personally in the brand by taking direct control of all things Lexus. His new role at Lexus' helm was a significant, yet largely overlooked, step in a sweeping management overhaul he unveiled in March.
In an interview prior to a Lexus event here, Toyoda said his goal is to imbue Lexus with more of the founding family's legacy and his own personal taste in cars. Toyoda said his job will be looking at the lineup with the "right side of the brain."
Toyoda, 57, said Lexus was derailed by bean counters during Toyota's decade of explosive growth. Now it is in the hands of the company's No. 1 car guy: Akio Toyoda.
In March, Toyoda reorganized the company by splitting it into four parts. One develops Toyota-brand vehicles for mature markets such as the United States and Japan. Another develops Toyota vehicles for emerging markets. A third conducts r&d on core shared technologies, such as engines and transmissions. And Lexus was carved out as the fourth stand-alone unit.
The other business units have an executive vice president who reports to Toyoda. But for Lexus, the president cut out the middleman.
The shift carries risks, not the least of which is anchoring the brand's image to the whims of a single executive. Toyoda is putting his own reputation -- and possibly his job -- on the line if his gambit falls short.
"What other brands have, but Lexus lacks, is a story, its own story, narrative or history," Toyoda said before the April 19 launch party for a global marketing campaign for Lexus. "I think the contents I can bring, as the head of a global company, also as a racing driver and as part of the founding family, could be conducive to story-making for Lexus."
Toyoda plans to leave his own fingerprints on the brand by:
• Strengthening Lexus' identity apart from Toyota.
• Injecting more flash into styling.
• Making the brand known for handling and driving qualities.
"When we have a design screening, my role is to simply talk with the right side of the brain," Toyoda said. "There are already enough people at Toyota who use the left side of the brain.
You need to be able to say, 'Wow! I want that!'"
Lexus clearly trails German luxury brands in the legacy category.
Toyota Motor, which just celebrated its 75th anniversary, rose from its humble origins as a spinoff from a loom maker to become the world's largest automaker.
But its Lexus brand dates back to just 1989 -- more than century after German engineer Karl Benz founded Mercedes-Benz in 1886.
And Lexus was conceived more as a premium sales channel than as a stand-alone marque, Toyoda said. For years after Lexus' debut in the United States, its nameplates were also sold in Japan as Toyotas.
"Lexus was born as a channel," Toyoda said. "One decision this time around is to really nurture and develop Lexus as a brand."
In 2012, Lexus' global sales climbed 23 percent to 477,000 units, as supply rebounded after being cut by the 2011 earthquake in Japan.
This year, worldwide sales should top 500,000 -- just shy of their all-time high of 518,300 in 2007, said Mark Templin, executive vice president of Lexus International.
In the United States, sales peaked at 329,177 in 2007, capping 12 straight years of growth. They slid in three of the five years since, with the only increases being a 6 percent gain in 2010 and a 23 percent rise, to 244,166, last year. Templin aims to surpass 260,000 in 2013.
Yet sales are still below those of the glory days.
Through April, U.S. sales rose 12 percent to 74,831, putting Lexus off the pace of its 2013 target. Lexus also trailed both Mercedes and BMW, as it has in recent years after a long run as the top-selling U.S. luxury brand.
Toyoda said he isn't focused on the numbers. As the final arbiter on Lexus, his job is the soft side. His top priorities for improving the brand are better styling and handling -- not necessarily customer service, premium features or added bells and whistles.
His own opinions about what the cars should be often butt heads with those of the Toyota bureaucracy. But Toyoda said that the jousting of opinions, a rarity in the past, is needed to churn out better cars.
"By having competition and conflict between the ideas that the bureaucracy has and my own personal concept of what the Lexus brand should be, that will bring us closer to what Lexus should be and the polished gem I want it to be," Toyoda said.
The downside: the plan largely hinges on the boss' own tastes.
"If it doesn't go well, he's putting himself at personal risk," said Chris Richter, an analyst with CLSA Asia-Pacific Markets in Tokyo. "But he could also be taking a risk by doing nothing. At least he knows what cars are all about."
Toyoda wants engineers to think more with their gut and less with their calculators, and cites the LF-LC sports coupe concept shown at the 2012 Detroit auto show.
Lexus executives originally brought the sculpted, low-slung rear-wheel-drive luxury hybrid to him as a pitch for their ultimate dream car. The debate that followed signaled changing attitudes.
"Before, we'd begin by talking about how many units we can sell, how much money we can make. Now, before even doing that, we're starting with, 'Wow, I want to build that car,'" Toyoda said. "We are now moving in the direction of a new Lexus."
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