Bloomberg- Luxury a Three-Car Race Again
06-06-14, 09:37 AM
#1
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Bloomberg- Luxury a Three-Car Race Again
http://www.bloomberg.com/news/2014-0...ace-again.html
Good read and article...pretty close race this year!
Good read and article...pretty close race this year!
Lexus is back in contention for the wallets of U.S. luxury vehicle buyers, after trailing its German competitors for three years.
Toyota Motor Corp. (7203)’s luxury marque outsold Daimler AG (DAI)’s Mercedes-Benz in May for the second time in five months and pulled within about 12,000 deliveries of market leader Bayerische Motoren Werke AG so far this year. The gap may close further with the Toyota City, Japan-based automaker scheduled to introduce the NX, the Lexus brand’s first compact crossover, and the RC sports coupe to its lineup later this year.
“The volume is not the goal, it’s to do the right things,” Mark Templin, executive vice president of Lexus, said in an interview in Tokyo. “It’s nice to know that people are responding to the new products we’ve launched. Over the last two years, we’ve had a string of hits.”
BMW and Mercedes overtook Lexus in U.S. luxury auto sales after Japan’s March 2011 earthquake and tsunami disrupted production of almost every model in its lineup. Lexus is contending again with its German rivals after arming dealers with a revamped IS sedan and GX sport utility vehicle, even as the company draws a line against introducing entry-level models priced for less than $30,000, like Mercedes did with the CLA.
“Toyota’s made the argument Lexus isn’t going to go down market,” Christopher Richter, a Tokyo-based auto analyst at CLSA Ltd., said by phone. “There’s a case for it, because by having cars like that you run the risk of diluting and lessening your brand.”
Winning Streak
When BMW and Mercedes both outsold Lexus in 2011, the two automakers ended an 11-year streak for the Japanese luxury brand as the top seller in the U.S. premium market. While Lexus trailed Mercedes for the No. 2 spot by about 30,000 deliveries the next year, its gap with BMW, the second-place brand last year, widened to more than 35,000 units.
Toyota builds every Lexus model in Japan except for the RX SUV and ships those vehicles to the U.S. market. The 23 percent decline in the yen against the dollar over the past two years has boosted earnings from those exports.
The combination of U.S. sales growth and a favorable yen-dollar exchange rate is putting Lexus on a path back to its mid-2000s profit peak, Jeff Bracken, general manager for the brand’s largest market, said in April.
While Toyota has said Lexus won’t top its 2007 record of almost 330,000 deliveries in the U.S. market this year, the brand is expanding from last year’s global all-time best of more than 523,000 vehicles sold.
To contact the reporters on this story: Craig Trudell in Tokyo at ctrudell1@bloomberg.net; Yuki Hagiwara in Tokyo at yhagiwara1@bloomberg.net
To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net Chua Kong Ho, Garry Smith
Toyota Motor Corp. (7203)’s luxury marque outsold Daimler AG (DAI)’s Mercedes-Benz in May for the second time in five months and pulled within about 12,000 deliveries of market leader Bayerische Motoren Werke AG so far this year. The gap may close further with the Toyota City, Japan-based automaker scheduled to introduce the NX, the Lexus brand’s first compact crossover, and the RC sports coupe to its lineup later this year.
“The volume is not the goal, it’s to do the right things,” Mark Templin, executive vice president of Lexus, said in an interview in Tokyo. “It’s nice to know that people are responding to the new products we’ve launched. Over the last two years, we’ve had a string of hits.”
BMW and Mercedes overtook Lexus in U.S. luxury auto sales after Japan’s March 2011 earthquake and tsunami disrupted production of almost every model in its lineup. Lexus is contending again with its German rivals after arming dealers with a revamped IS sedan and GX sport utility vehicle, even as the company draws a line against introducing entry-level models priced for less than $30,000, like Mercedes did with the CLA.
“Toyota’s made the argument Lexus isn’t going to go down market,” Christopher Richter, a Tokyo-based auto analyst at CLSA Ltd., said by phone. “There’s a case for it, because by having cars like that you run the risk of diluting and lessening your brand.”
Winning Streak
When BMW and Mercedes both outsold Lexus in 2011, the two automakers ended an 11-year streak for the Japanese luxury brand as the top seller in the U.S. premium market. While Lexus trailed Mercedes for the No. 2 spot by about 30,000 deliveries the next year, its gap with BMW, the second-place brand last year, widened to more than 35,000 units.
Toyota builds every Lexus model in Japan except for the RX SUV and ships those vehicles to the U.S. market. The 23 percent decline in the yen against the dollar over the past two years has boosted earnings from those exports.
The combination of U.S. sales growth and a favorable yen-dollar exchange rate is putting Lexus on a path back to its mid-2000s profit peak, Jeff Bracken, general manager for the brand’s largest market, said in April.
While Toyota has said Lexus won’t top its 2007 record of almost 330,000 deliveries in the U.S. market this year, the brand is expanding from last year’s global all-time best of more than 523,000 vehicles sold.
To contact the reporters on this story: Craig Trudell in Tokyo at ctrudell1@bloomberg.net; Yuki Hagiwara in Tokyo at yhagiwara1@bloomberg.net
To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net Chua Kong Ho, Garry Smith
06-06-14, 10:00 AM
#2
I always love that Lexus claims they're preserving their brand by not dipping into the $29,900 realm of pricing. But in reality, the avg Lexus transaction price is already way lower than Mercedes and BMW, and they're even lower than Audi, Infiniti, and Cadillac. Lexus is higher than Acura though, and just slightly higher than Lincoln.
So yes, Lexus is already "downmarket" compared to the competition, I guess another low priced model would dilute it even further.
Lexus needs more models/volume in the upper segments.
So yes, Lexus is already "downmarket" compared to the competition, I guess another low priced model would dilute it even further.
Lexus needs more models/volume in the upper segments.
06-06-14, 10:18 AM
#3
^Can you provide links for that information? I'd like to see the numbers.
I assume that Lexus would be below BMW and Mercedes, as the bulk of Lexus' sales are in the $38-48k bracket where RX, ES and IS reside, but I am surprised to hear that Audi, Cadillac and Infiniti have higher transaction prices.
I assume that Lexus would be below BMW and Mercedes, as the bulk of Lexus' sales are in the $38-48k bracket where RX, ES and IS reside, but I am surprised to hear that Audi, Cadillac and Infiniti have higher transaction prices.
06-06-14, 10:32 AM
#4
It's data that I can see being in the automotive industry. Not published anywhere. I'm not surprised that Audi is higher, with the # of S/RS variants they're spinning up for the A6/A7/A8 lines, etc.
06-06-14, 10:38 AM
#5
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I always love that Lexus claims they're preserving their brand by not dipping into the $29,900 realm of pricing. But in reality, the avg Lexus transaction price is already way lower than Mercedes and BMW, and they're even lower than Audi, Infiniti, and Cadillac. Lexus is higher than Acura though, and just slightly higher than Lincoln.
So yes, Lexus is already "downmarket" compared to the competition, I guess another low priced model would dilute it even further.
Lexus needs more models/volume in the upper segments.
So yes, Lexus is already "downmarket" compared to the competition, I guess another low priced model would dilute it even further.
Lexus needs more models/volume in the upper segments.
Lexus is below BMW/Benz but it was higher than Infiniit. Totally agree they need more top heavy cars but to call it downmarket is really not accurate at all.
Now I'm going to have to see can I get the data since you won't provide it.
Last edited by LexFather; 06-06-14 at 10:45 AM.
06-06-14, 10:48 AM
#6
I tend to agree with you pbm317.
I just reported in the Future of Lexus Thread a few days ago, the original allotment of 20,000 NX's has been upped to 40,000 units. Lexus is shooting for volume and wants to regain the sales crown (word is trickling down the corporate latter - but they won't admit it). Consumers should be stoked, but from a business standpoint Lexus dealers are left
. When the 3IS released a year ago it was being sold for near invoice on a brand new car. Local dealers are left undercutting each other as there is no 'One Price' which Lexus needs to switch too as far as the dealer network is pushing for, some uniformity. There is almost no profit margin in new cars anymore, Lexus dealers are being forced to sell in volume because they're taking losses on transactions. Our business makes money from used cars and service only now (unlike the golden era around 2005). From an image standpoint it somewhat dilutes the brand as well being less exclusive and more attainable. Frankly I care more that Lexus is first and foremost about quality then quantity. Clearly none of us are calling the shots :/
I just reported in the Future of Lexus Thread a few days ago, the original allotment of 20,000 NX's has been upped to 40,000 units. Lexus is shooting for volume and wants to regain the sales crown (word is trickling down the corporate latter - but they won't admit it). Consumers should be stoked, but from a business standpoint Lexus dealers are left
. When the 3IS released a year ago it was being sold for near invoice on a brand new car. Local dealers are left undercutting each other as there is no 'One Price' which Lexus needs to switch too as far as the dealer network is pushing for, some uniformity. There is almost no profit margin in new cars anymore, Lexus dealers are being forced to sell in volume because they're taking losses on transactions. Our business makes money from used cars and service only now (unlike the golden era around 2005). From an image standpoint it somewhat dilutes the brand as well being less exclusive and more attainable. Frankly I care more that Lexus is first and foremost about quality then quantity. Clearly none of us are calling the shots :/
06-06-14, 11:51 AM
#7
Lexus Fanatic
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There is almost no profit margin in new cars anymore, Lexus dealers are being forced to sell in volume because they're taking losses on transactions. Our business makes money from used cars and service only now (unlike the golden era around 2005). From an image standpoint it somewhat dilutes the brand as well being less exclusive and more attainable. Frankly I care more that Lexus is first and foremost about quality then quantity. Clearly none of us are calling the shots :/
i know those folks are just trying to make a living but there must be a better way.there are vehicles i'd like to go test drive, but i don't want to go near a dealer.
i sincerely hope dealers are taken out of the new car sales process in the future, or just make it a point and click transaction, and focus on after market service.
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06-06-14, 12:43 PM
#8
i hear ya, and have heard from numerous sources about the lack of any money in selling new cars these days. i personally believe a huge problem is because the dealer doesn't provide any value in the sales process. moreover, the process is typically painful for consumers. salespeople are generally CLUELESS about the vehicles they're selling. they lie repeatedly. and they play tricks on unsuspecting customers. so they get no respect, and the dealers have the salespeople all competing like a feeding frenzy. it's a bit like going into a big furniture store when you get pounced on when you walk in and feel icky. i know those folks are just trying to make a living but there must be a better way.
there are vehicles i'd like to go test drive, but i don't want to go near a dealer.
i sincerely hope dealers are taken out of the new car sales process in the future, or just make it a point and click transaction, and focus on after market service.
i know those folks are just trying to make a living but there must be a better way.there are vehicles i'd like to go test drive, but i don't want to go near a dealer.
i sincerely hope dealers are taken out of the new car sales process in the future, or just make it a point and click transaction, and focus on after market service.
I think dealers will last as long as franchises and groups continue to find a business case for them. Our automall's franchise owner Hendrick Automotive just divested Infiniti a few months ago and Volvo before that. $20,000,000+ is being invested into our Lexus Store for a new 82,000sqft facility which will be among the first of Lexus's new dealer design language with state of the art technology and facilities
. The BMW and Mini store is getting about half the amount for a refresh they just started construction, and the Acura store presumably get what's left in two years if they're still around 
. Otherwise Tesla has it right with direct from factory sales IMO. As a member of an Automall it doesn't frighten me entirely if dealers were middled out. Would be the perfect opportunity to join Lexus corporate or even Tesla which six friends and ex-coworkers have joined since they took over NUMMI.
06-06-14, 02:30 PM
#10
Lead Lap
Can't wait to see what happens as this gets closer to December. The CLA hasn't been helping Mercedes at all because its so capacity constrained. The NX is coming, but Mercedes has the GLA and new C-class coming too.
06-06-14, 03:00 PM
#12
Perhaps now with the latest S-Class forsure. A S550 with typical options is roughly $120,000 vs say $85,000 for the LS. The '13 refresh was nice but sales have since fizzled. 4.5LS is still one of the best built sedans and for the money too, but the 5LS can't come soon enough.
06-06-14, 05:25 PM
#13
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Competition is not standing still either. I just noticed that MB has updated their website for the new GLA. Then we have the new C class, refreshed CLS, new B class electric, and new S class coupe. MLC is coming later next year as well.
06-06-14, 05:54 PM
#14
Lexus Fanatic
now seeing that 07 was Lexus' biggest sales year , this might explain why my 07 LS460 and 07 GS350 had some quality issues like wind noise (LS) and rattles (GS). ( pretty sure the fact they were first year models didnt help either).
Doesnt it make sense that Lexus would have a lower avg sales price since their cars are cheaper ( exchange rate plus better value) and they dont have cars that are priced into the stratosphere other than LFA? And thats a mythical beast of tiny boutique numbers .
Doesnt it make sense that Lexus would have a lower avg sales price since their cars are cheaper ( exchange rate plus better value) and they dont have cars that are priced into the stratosphere other than LFA? And thats a mythical beast of tiny boutique numbers .
