Fizzboy7

I'm not so sure I completely agree with Templin's thoughts. In fact, they sound like defensive excuses in light of newly successful competitor models. Other brands do very well selling cars like the CLA and A3. Mind you they have some decontenting, but buyers don't seem to mind and sales are strong. I have also seen zero evidence selling sub-$30k cars does anything negative to a luxury brand's name or reputation. All it has done so far is bring in more profits to the maker. And isn't that the point in the longrun.... to make more money? I think Lexus could be missing out on a opportunity. The CT sort of skimmed along this affordable luxury idea, but making it a hatchback without some wood trim inside were it's biggest faults for our market.

LexBob2

Top execs in most businesses, especially automotive, are reluctant to acknowledge or give credit to the competition.

Slvr surfr

iTrader: (1)

Exactly. Its not like he will sit here and say "Yeah, thats a smart move MB made with the CLA. Wish we've thought of that".

LexFather

rominl hit the nail on the head when he said Global. You won't see a 120hp FWD Lexus with no air driving around. His comments are not even that new, we heard them months ago.

It seems every time Lexus says something, people in here want to rip it apart, put the worst spin on it and just toss negatively around the brand. Great support system.

MPLexus301

iTrader: (3)

I see Templin's point, as I see the points of Paul, Henry and others on this subject. A few random points:

1) Being hatchback-only and hybrid-only, I consider the CT quite different than the CLA or A3, which are FWD sedans with 4 cylinder gas engines - pretty much the most mainstream configuration in this country. I don't think Lexus made a ploy for volume with the $33k CT or they would have gone with a different formula. The CT also really isn't going to distract someone from buying a $37k IS or NX, either - it's too different. A3 and CLA are packaged and priced for the mainstream, and I'm sure they're also taking a bite out of A4 and C Class sales in the process.

2) Think about the business case here: Toyota has no incentive to take Lexus downmarket. IS is still a growing product - only in the last generation did we get different engine options, we don't have a high performance version (For Gen 3), there's a hybrid but it's not sold here and no wagon. Corolla (which would make sense to base a CLA-fighting Lexus on) is the best selling nameplate in the world, and both the Camry and Avalon can easily reach into the $30-38k market, along with IS and ES. I just don't think Toyota wants or needs another sedan in that price range. Mercedes and BMW have made this move because they don't have parent companies with product in this space - they want that chunk of the market. Audi has followed suit regardless of VW, I think because Merc and BMW have done it.

3) To the point about Lexus needing more high end product, I agree and it is coming. Their CUV/SUV strategy has really never been very solid: LX came first, years later we got RX, then BOF GX. The core of this market has been three-row CUVs and Lexus doesn't even have one of those yet. X5s, GLs and MDXs run $45 - $80k and they sell a ton of them. Lexus has nothing in that space, as they've relied on the RX for that market, GX is niche and LX is too expensive. As for sedans, GS is still expanding with new products and has a forthcoming entry level engine, expanded offerings for the 450h and an F model. I imagine that the next LS will have more engine options as well. We have RC coming online and shortly after that, SC/LF-LC.

As for this article specifically, quite frankly, I think Mark Templin is right. Why sacrifice the brand image just to pull people into the lineup? I have been in CLA and the interior is maybe a few steps over a Corolla, with nice Mercedes detailing. I think that the dashboard of the A3 is pretty horrible looking, and the rest of the interior feels like a $25-30k pricepoint. It is what it is. They're cheap, FWD four cylinder cars aimed at people who quite frankly don't know better and are happy with that type of vehicle. It's a strategy that is clearly driving profit, but Toyota is already the largest and most profitable automaker without pimping Lexus to get there. I just don't think we're going to see them change that anytime soon, either.

LexFather

Great post. I've mentioned here before, Mercedes dealers are not huge on the CLA.

http://www.complex.com/sports/2013/1...d-camry-buyers

http://jalopnik.com/hot-selling-merc...d-b-1469867076

It has sold AMAZINGLY well, it is very well received though doing pretty average in reviews. Consumers LOVE the car. They seem to be everywhere.

The job will be on dealers to appease these new customers to the brand. Also I've now heard plenty jokes of the CLA/CLS. Same with the A3. BMW actually has targeted both with their RWD 320 calling them out for being FWD econo cars in some advertising.

Pretty interesting stuff

TF109B

You still refer to the engines made in Japan, which has nothing to do with their claims. TMG made the F1 cars, did those engines come from Japan? No. So saying that the current engines in the race cars have some relation to TMG being incapable or whatever is useless. Theyre perfectly capable of doing anything and everything in house. The TMG brand plan was about that. They didnt go ahead with it, but that means little to their capabilities. In fact that is the opposite. Youre discrediting them because the THS-R and other race engines are japanese made and they didnt do the TMG 'brand' performance cars. You nor I are fortune tellers so we probably should hold off saying things are certain one way or the other.

Anyway, imo Lexus would be 'selling out' if they made sub 30k cars for volume. Thats not Lexus. Theyre about cars that come loaded for the price. BMW and co. charge you out the rear for standard equipment on a Lexus. Thats their selling point, they should keep to it.

spwolf

between comment happy TMG president and rumor happy Aussie/UK press, sure, I am willing to bet that most of that stuff is going to be bollocks.. so far none of those rumors of wild ideas have run true at all - and we have few years to reflect on. So it is up to them to prove that it is valid, not us... so far they have 0 credibility. Credibility is earned not assumed.

And in general, since TMG is not developing engines right now, even for race applications , I seriously doubt that they can produce manual transmission for hybrid powertrains or pretty much anything for production vehicles that is going to be "better" than what people in Higashi-Fuji technical centre will do. Toyota built this huge tech center to concentrate engine development in same place for better sharing of ideas and better work environment so I seriously doubt that TMG has capabilities and people that can come close to that.

TangoRed

Well if we look at this globally, then Mercedes producing these models shouldn't be an issue to start with. Over in Europe, where Mercedes is the taxicab brand of choice in many countries, the A-class (which came out in 1997, mind you) has not dented their image at all. Other markets can tolerate a full-range model line and still have respect for the luxury vehicles an automaker produces too.

MPLexus301

iTrader: (3)

Considering this strategy of branding FWD 4 cyl econo cars and high end luxury models under one badge, perhaps Mercedes' greatest Asian competitor is Hyundai

TF109B

Actually, TMG president is Yoshiaki Kino*****a, not Rob Leupen (who made the comments). He is the director of business operations. And your 'doubts' are unfounded. TMG was made to be able to make vehicles in house. Theyre facilities have all the tools to make and produce their own car. If TMG dont have people capable of making or designing hybrid powertrains, gearboxes or engines, how did they ever make wrc cars and the TS020 or F1 cars?

Man, I just linked to their management website. Hisatake Murata is called the founder of racing hybrids- works for TMG. Did you miss that? Surely the staff at TMG have plenty of experience. In fact they just had a job add for electrical systems and mechanical design engineers http://www.toyota-motorsport.com/en/...unities-at-tmg. I dont think you know just what Toyota has been doing over there.

TangoRed

Lol good point

UZJ100GXR

It is interesting to note the LX currently outsells the Lexus LS and Lexus GX Worldwide

bitkahuna

iTrader: (20)

bmw and mb don't have another bigger 'mainstream' brand like audi and lexus (vw and toyota respectively), and in the global car game, volume is really important unless you want to go uber-niche like aston martin or ferrari or something, with commensurate necessary huge price tags and margins.

so bmw and mb need to do stripped 1 series, a/b class, etc. lexus does not.

in the u.s. it's a REAL problem for bmw/mb as they will need higher volumes of high fuel economy models sold to reach CAFE standards, or pay huge fines. lexus/audi do not have this problem as far as i know.

agreed. my point being, leasing lets a lot of people get into these brands without much concern for what the selling price of the vehicle is, and the car makers are happy to do it, knowing they'll have good vehicles for CPO sales later. without leasing, luxury car brands would have major challenges selling in any significant volumes.

i think the buyer profiles have been different although they may be getting closer. for example, i bet a lot of RX customers buy the vehicle. they're looking for a highly reliable 'sensible' but stylish and classy looking vehicle that they intend to keep for a good while. on the other hand i bet the MAJORITY of x3/x5/ml/glk vehicles are leased.

on the high end, like s-class / LS, i bet most are leased regardless, and a lot of the buyers are getting the vehicles to 'look' rich rather than actually being rich. of course there are still a lot of rich buyers/leasers too.

bitkahuna

iTrader: (20)

agreed, and as i said above, i don't think they need to, so why dilute the brand. mb/bmw on the other hand, have no choice it seems. this is an achilles heel for them which lexus can and will exploit and is obviously talking about.

toyota has taken a (very) long view with lexus. grow the brand slowly, carefully, gain insight, refine, rinse, repeat.

the lx of course is a rebadged upscale landcruiser and the gx is a rebadged and upscale prado. lexus must make a TON of money per unit with these, especially as they are now very old. they also make a TON on the RX because it's old, made in Canada, and not really very luxurious. but all 3 are highly reliable, extremely well made, distinctive, and respected. the trick base model pricing of the gx kickstarted the ol' gal's sales, which was genius marketing. on a related note, i wonder if they did a base GS450h for example to get more people experiencing the amazing drivetrain, whether that would help? anyway, lexus is no doubt happy with rx/gx/lx sales, but yeah, as you point out, they're winning a battle and losing a war compared to x5/gl/mdx, etc. but lexus no doubt knows it, and again, long view, they'll get there. not as quick as any of us would though.