Lexus VP: Not focused on U.S. sales volume or higher incentives despite falling sales
04-15-09, 01:24 PM
#1
Lexus Champion
Thread Starter
Lexus VP: Not focused on U.S. sales volume or higher incentives despite falling sales
http://www.bloomberg.com/apps/news?p...Kg&refer=japan
Toyota’s U.S. Pain Amplified by Falling Lexus Sales
By Alan Ohnsman
April 6 (Bloomberg) -- Toyota Motor Corp.’s $64,000 Lexus LS sedan and $67,000 Lexus SC Coupe are magnifying the carmaker’s financial pain in the biggest auto market.
Sales of the best-selling luxury car brand in the U.S. fell 37 percent in the first quarter, led by a drop in demand for the most expensive models. The company has sacrificed profit margins to stanch the decline.
Toyota had its first annual loss in six decades as the global recession decimates auto sales. Surging incentives at other luxury brands including Bayerische Motoren Werke AG, Daimler AG and Audi AG has forced the Toyota City, Japan-based carmaker to more than quadruple discounts on Lexus models in the last two years, according to Edmunds.com.
[...]
Lexus’s drop mirrors the overall plunge for luxury cars and sport-utility vehicles, which are down 38 percent in the first quarter, according to sales tracker Autodata Corp.
Customer Growth Partners LLC, a retail consulting firm in New Canaan, Connecticut, estimates total U.S. luxury purchasing has fallen 21 percent this year, after a 12 percent drop in 2008’s fourth quarter.
Incentives
The jump in incentives was the result of clearing out supplies of RX SUVs, the top-selling Lexus, when a new version recently went on sale, according to Mark Templin, Lexus’s general manager.
Overall luxury car incentives averaged $4,022 last month and luxury SUV discounts were $3,944, according to Edmunds.com. Lexus first-quarter incentives trailed BMW, which offered $4,936 a vehicle and Mercedes-Benz’s average of $4,569. The two European companies increased such spending last month, while Lexus’s dropped to $1,928.
Luxury segment competitors’ “incentive spending is at incredible levels now and that’s not necessarily the best way to run a business,” Templin said. “Our focus at Lexus has never been on volume.”
In Japan, Lexus sales sank 50 percent in March and 35 percent in the just-ended business year, according to figures the company released this week.
“The global luxury car market is expected to remain tough,” said Mamoru Kato, an analyst at Tokai Tokyo Securities in Tokyo. “The brand will continue to struggle.”
While the recession cuts Lexus demand, not all of Toyota’s models are losing sales. Sales of the Passo compact car surged 31 percent in February in Japan. The car costs $13,000.
By Alan Ohnsman
April 6 (Bloomberg) -- Toyota Motor Corp.’s $64,000 Lexus LS sedan and $67,000 Lexus SC Coupe are magnifying the carmaker’s financial pain in the biggest auto market.
Sales of the best-selling luxury car brand in the U.S. fell 37 percent in the first quarter, led by a drop in demand for the most expensive models. The company has sacrificed profit margins to stanch the decline.
Toyota had its first annual loss in six decades as the global recession decimates auto sales. Surging incentives at other luxury brands including Bayerische Motoren Werke AG, Daimler AG and Audi AG has forced the Toyota City, Japan-based carmaker to more than quadruple discounts on Lexus models in the last two years, according to Edmunds.com.
[...]
Lexus’s drop mirrors the overall plunge for luxury cars and sport-utility vehicles, which are down 38 percent in the first quarter, according to sales tracker Autodata Corp.
Customer Growth Partners LLC, a retail consulting firm in New Canaan, Connecticut, estimates total U.S. luxury purchasing has fallen 21 percent this year, after a 12 percent drop in 2008’s fourth quarter.
Incentives
The jump in incentives was the result of clearing out supplies of RX SUVs, the top-selling Lexus, when a new version recently went on sale, according to Mark Templin, Lexus’s general manager.
Overall luxury car incentives averaged $4,022 last month and luxury SUV discounts were $3,944, according to Edmunds.com. Lexus first-quarter incentives trailed BMW, which offered $4,936 a vehicle and Mercedes-Benz’s average of $4,569. The two European companies increased such spending last month, while Lexus’s dropped to $1,928.
Luxury segment competitors’ “incentive spending is at incredible levels now and that’s not necessarily the best way to run a business,” Templin said. “Our focus at Lexus has never been on volume.”
In Japan, Lexus sales sank 50 percent in March and 35 percent in the just-ended business year, according to figures the company released this week.
“The global luxury car market is expected to remain tough,” said Mamoru Kato, an analyst at Tokai Tokyo Securities in Tokyo. “The brand will continue to struggle.”
While the recession cuts Lexus demand, not all of Toyota’s models are losing sales. Sales of the Passo compact car surged 31 percent in February in Japan. The car costs $13,000.
04-15-09, 01:26 PM
#2
Lexus Fanatic
Lexus will always remain strong in sales. They may have been hit with the economy, but their will be a bunch of customer loyalty. Especially, when they offer incentive like 0% to 3.9% financing and the Lexus December to remember sales event. Production will definitely be impacted.
04-15-09, 01:28 PM
#3
BMW, which offered $4,936 a vehicle and Mercedes-Benz’s average of $4,569. The two European companies increased such spending last month, while Lexus’s dropped to $1,928.
to Lexus for sticking to the game plan and do the right thing.
04-15-09, 01:29 PM
#4
Lexus Fanatic
04-15-09, 01:41 PM
#5
Guest
Posts: n/a
Glad to see Lexus sticking to their guns. It will only help the true bottom line. The Germans and others have tons of incentives and lease deals/financing deals which is great for the buyer but you have to question their true desirablility without those deals.
BMW corporate already bished about how the American operations were handling things and looks like nothing is changing at all.
That said there is one thing to consider and that is in Benz's case they have cars up to 180k MSRP stock and near 200k loaded. You can get S65s for 40k off sticker no issues. So it throws off the incentive average.
Back to Lexus from day one they have stated they do not chase sales and if they are the #1 selling brand, they love the fact but that is and never is their goal. I hope to see them attack the global market better and more effectively as many countries do not want the same setups Americans want.
BMW corporate already bished about how the American operations were handling things and looks like nothing is changing at all.
That said there is one thing to consider and that is in Benz's case they have cars up to 180k MSRP stock and near 200k loaded. You can get S65s for 40k off sticker no issues. So it throws off the incentive average.
Back to Lexus from day one they have stated they do not chase sales and if they are the #1 selling brand, they love the fact but that is and never is their goal. I hope to see them attack the global market better and more effectively as many countries do not want the same setups Americans want.
04-15-09, 01:44 PM
#6
Lexus Fanatic
Lexus will probably always remain at the top in car purchases not only for safety, but for quality and Consumer Reports ratings. I am truly happy they stick to their guns as well. I doubt we will see the day Lexus chases sales.
Trending Topics
04-15-09, 01:53 PM
#8
Lexus Champion
I understand their reason for doing this... they want their brand to appear strong, not desperate, not watered down, and they can afford to be 'stubborn' like that and not follow the free market forces... but as a result they will not earn my business or the business of many other owners.
They're basically sacrificing current profit for long term brand image. Since I don't care about brand image and do care about value for my dollar, Lexus is way off my radar in this regard.
They're basically sacrificing current profit for long term brand image. Since I don't care about brand image and do care about value for my dollar, Lexus is way off my radar in this regard.
04-15-09, 02:00 PM
#10
Lexus Champion
That and Buick Lacrosse are tops on my list right now in the 30k dollar "not so fuel efficient" category of the cars I'm interested in.
It's this whole conversation funny though... think back to 1990. Benz and BMW are flying high, charging an arm and a leg and laughing all the way to the bank with their high polish nose in the air image. Lexus comes in and submits the LS... a car offering most everything Benz and BMW offer for way less money. They laugh, refuse to react because it's "beneath them" and their brand image to do so, and Lexus gets the last laugh.
Now here Lexus is talking about how competing with incentives and greater pricing value in tough economic times is beneath them. And here Hyundai sits with the Genesis. Oh how it seems Lexus has forgotten their roots.
LOL
It's this whole conversation funny though... think back to 1990. Benz and BMW are flying high, charging an arm and a leg and laughing all the way to the bank with their high polish nose in the air image. Lexus comes in and submits the LS... a car offering most everything Benz and BMW offer for way less money. They laugh, refuse to react because it's "beneath them" and their brand image to do so, and Lexus gets the last laugh.
Now here Lexus is talking about how competing with incentives and greater pricing value in tough economic times is beneath them. And here Hyundai sits with the Genesis. Oh how it seems Lexus has forgotten their roots.
LOL
Last edited by Threxx; 04-15-09 at 02:04 PM.
04-15-09, 02:15 PM
#11
If my memory serves me right, Lexus WANTS to the tier-1 luxury maker and a direct competitor to MB from day one, the best-bang-for-the-buck first generation LS400 was just their ticket to the dance. I personally believe (don't have anything to back me up) that from the very beginning Lexus' strategy was once they have a piece of the pie (like they do now) they'll play with the big boys fair and square.
Hyundai on the other hand is going for this valued luxury image. By not creating a luxury brand it's easily to see that they are not following the Lexus playbook play by play. They have tweaked the "Lexus story" in order to fit their current situation and corporate culture, how will they end up with this route is still a big unknown.
04-15-09, 02:52 PM
#12
Guest
Posts: n/a
I don't know about this "Lexus has forgotten its roots" argument...
If my memory serves me right, Lexus WANTS to the tier-1 luxury maker and a direct competitor to MB from day one, the best-bang-for-the-buck first generation LS400 was just their ticket to the dance. I personally believe (don't have anything to back me up) that from the very beginning Lexus' strategy was once they have a piece of the pie (like they do now) they'll play with the big boys fair and square.
Hyundai on the other hand is going for this valued luxury image. By not creating a luxury brand it's easily to see that they are not following the Lexus playbook play by play. They have tweaked the "Lexus story" in order to fit their current situation and corporate culture, how will they end up with this route is still a big unknown.
If my memory serves me right, Lexus WANTS to the tier-1 luxury maker and a direct competitor to MB from day one, the best-bang-for-the-buck first generation LS400 was just their ticket to the dance. I personally believe (don't have anything to back me up) that from the very beginning Lexus' strategy was once they have a piece of the pie (like they do now) they'll play with the big boys fair and square.
Hyundai on the other hand is going for this valued luxury image. By not creating a luxury brand it's easily to see that they are not following the Lexus playbook play by play. They have tweaked the "Lexus story" in order to fit their current situation and corporate culture, how will they end up with this route is still a big unknown.
Exactly. Lexus never relied on incentives, NEVER. The brand is not for everyone. Its clear that Lexus may not be a "deal" compared to the past but its b/c the cars have gotten better and are now true German equivilents in most cases. Their MSRP is STILL way less in most cases so not sure what the complaints are.
So let me get this right;
Lexus-prices appropriately, sells cars based on their merits as well as value. No need for huge incentives
Germas-prices themselves out of reach, thus relies on lease deals, incentives, etc to sell cars.
Why not just price the car where it should instead of relying on incentives?
Let us not forget what helped Lexus initially in the early 1990s was the yen/dollar ratio. When the yen strengthed, the MSRP rose every single year. The Ls went from 35k to 50k in 5 years! People STILL bought them.
Its another reason you have to look "deeper" at sales figures.
04-15-09, 07:10 PM
#15
Lead Lap
Join Date: Oct 2008
Location: Texas
Posts: 667
Likes: 0
Received 0 Likes
on
0 Posts
I run into this all the time, mostly from move-up buyers.
"What kind of incentives are you offering? What rebates?"
They are shocked when they learn that we don't do rebates, for the most part, we only have financing incentives on a couple models, and there is no $10K discount. I spend a lot of time on the car and features and perks we offer, so when I tell them we sell cars based on value, not on rebates, it seems more palatable.
We'll go a little deeper these days to make a deal, but if a deal doesn't make sense, I go grab a manager and we tell the people thanks for considering us, let us know when you feel ready to move into a Lexus.
Some people are truly shocked when I shake their hand and start walking to the door. I've had people sit outside in their cars for a while, expecting me to run out and tell them we'll do their deal.
It's amusing.
"What kind of incentives are you offering? What rebates?"
They are shocked when they learn that we don't do rebates, for the most part, we only have financing incentives on a couple models, and there is no $10K discount. I spend a lot of time on the car and features and perks we offer, so when I tell them we sell cars based on value, not on rebates, it seems more palatable.
We'll go a little deeper these days to make a deal, but if a deal doesn't make sense, I go grab a manager and we tell the people thanks for considering us, let us know when you feel ready to move into a Lexus.
Some people are truly shocked when I shake their hand and start walking to the door. I've had people sit outside in their cars for a while, expecting me to run out and tell them we'll do their deal.
It's amusing.