(Cj)

I know this is a topic that gets beaten to death a lot, but with 3 sedans under $35K and the LF-Ch coming, is Lexus too "low end" for a high end brand.

The fact that Lexus has so many entry sedans is always used as an explanation for their success by Lexus haters, but it is true that no other luxury brand has as many sedans under the $35K mark.

I'm not saying that Lexus should perfectly model BMW's or Mercedes's product lineups but I'm wondering if having so many affordable vehicles affects Lexus's image.

LexFather

Very good thread.

Studies 15 years ago showed the entry level market was the fastest growing market for luxury cars (SUVs were the other segment). Today this still holds true. The 30-40k market is the most popular. Quite frankly automakers who ignored these findings are idiots. This is what gets people into your brand and hopefully they stay there.

There are different methods here to achieve high sales in this segment. BMW for instance has many variations of the same car, the 3 series and its still the top selling in class here. In Europe there are near 50 versions of the 3 series!! Now they have the 1 series at the same price for people that want something smaller. They are going from just the X3 to the X1 and X3.

I love the Lexus method of offering 3 distinct different vehicles at the same price point. The IS/ES/HS all offer different experiences not to mention looks inside and out. The numbers show the method works. No one else uses this method. I would like to see mixes though, hybrid IS/ES...AWD ES...etc..

Acura has the TL/TSX in the 30-40k range....Infiniti had the I35/G35 but the I35 sold poorly and was canned. Nissan still offers the Maxima in the 30-40k segment and it sells like hotcakes. Audi has the A3/A4 in the 30-40k range.

When we get to MSRPs, the IS/ES/HS are not some 31k car. Most IS 250s are in the 35k range. The IS 350 in the 40k range. The ES starts at 34k as the HS does. With one option package, they are closer to 40k than 30k.

So they "start" under the 35k mark but they "sell" over it.

In Europe the Germans know this market is growing and they want to sell more cars. They know the submarket is growing. So what is happening?

1. The 3/A4/C class are getting bigger and bigger. Why?
2. They are building 1/A3/A/B class cars. Well after a couple of generations what happens?
3. They get bigger. They are expanding the lineups. The new A3 will have tons of variations. We don't get most of the 1 series variants.
4. Thus the LF-Ch concept...its ideal for Europe and we might just get it.

You make a good point about the Lexus haters who have all the I.Q of a burned issue of Car and Driver. They are hating a company for being successful? Surely if their favorite brand had 3 cars at this price point and all sold well and all were solid cars, they would love it.

These same idiots try to categorize Lexus as the "German Benz". You can't do that, they have everything from plush Benz leaning cars like the LS to BMW leaning cars like the IS-F and now a LF-A. They are continuing their identity while expanding their lineup.

The Global director said the next 10 years will be very very exciting for the brand as they stay true to values but move into other segments. So expect more of the same ES/LS/RX but more hybrids, more F-cars and new vehicles.

The bottom line is in 20 years, the Lexus way WORKS. The trophy case shows it, the happy owners show it, the news results show it, the way they are targeted shows it.

Why hate success?

On the flipside, funny but Lexus has so far avoided the cute-ute market and publicly stated in the past and just this past week that the RX outsells the ENTIRE segment (something I've always mentioned). Why are other brands going into this market I HAVE NO IDEA. There is a SMALL market for it. The RDX and EX are sales failures. Their management has FAILED by going into that market and avoiding the ones where the signs showed more growth. Instead they should have produced another sedan or coupe in the 30-40k segment. Haters would rather Lexus enter that dumbass segment and fail instead of being successful with their method.

Finally Lexus can afford to have many entry level cars as they are a true luxury brand. Its not it starts and ends there and they fail elsewhere. Its not like they only offer the next level car up. They offer the GS/RX/GX in the 40-65k range. The RX 450h can hit 60k now. Past that you have the SC/LX and all the LS models. Now you have the LFA. So Lexus has multiple vehicles over the entry level point.

Now that I think of it. (base MSRPs off the top of my head)

IS/ES/HS 30-45k (IS-F is a 55-65k car)
RX 40-60k
GS-45-65k
GX-51-60k
SC-65k
LX-75-85k
LS-65-120k
LFA- 400k

encore888

With the addition of the HS, there are indeed 3 entry-level cars, but I don't see that as a problem particularly in the current economic environment. That being said, long-term I'd like to see similar attention paid to expanding the upper-middle segment...the GS, F-models, perhaps some other coupes/converts such as a new SC...the LS is now a line of variants, and perhaps the GS can do a similar thing, just as the IS has.

Blackraven

They may need something for the lower-end though for markets such as Europe and parts of Asia (which have heavy vehicle taxation rates).

LexFather

Correct.....so this is coming

encore888

Also I might add, the entry-level question and more sedans does override a prior criticism of Lexus -- too many SUVs, lineup is too dominated by SUVs, etc. etc. Now they have five car lines and three SUV lines. The RX in its late-90s debut accounted for nearly half of Lexus sales, by 2008 it was down to a third--this year it is up to levels of years past though. But with more sedans and hopefully coupes, they are now back to being what they originally were -- a brand of luxury cars -- and now also crossovers/SUVs.

Blackraven

Yup, it would be interesting to see the final version. For instance, the 1-series hatchback sells quite well here in the Philippines (same sales numbers with the E90). Most models sold here are composed of 120i and 118d. Even with its ****-poor rear legroom, it apparently sells not bad.

So yeah, it would be a welcome to see it here

P.S.
With that said though, I beg to wonder why MB was being criticized for its A and B class cars. According to the critics, they same that small cars like that ('small fry' as they say) just taint the prestige and upscaleness of the brand.

Well alright, they have their own opinions then. Fine. However, I do love the A class and I'm really glad that MB is releasing a new version of it in the next few years

GFerg

I flip flop on this all the time. Sometimes I feel like they dont have to many (they currently cover all bases, sport, luxury, hybrid), other times I feel like they do because IMO I think the HS is such a half-assed car. However, I will say that they sure as hell better not add another 4-door to their line up. I wouldnt mind another 30-40k vehicle... but only if it was a coupe.

The LF-Ch gets a pass as that model will more than likely be a hatchback/wagon. With crossovers and the like gaining popularity, adding it to the line up will be a smart move as it is more versatile. Hell, they could modify it to serve double duty as a Cute-ute competitor (I'm not saying that will be a good idea though ).

LexFather

Very good point. Who knows, maybe we will see the GS get a sedan brother? These buyers who are happy with the brand will need more than just the GS to move up to I am now thinking. Hmmmmmmm...

Thanks for your insights. There isn't a level global playing field in regards to prestige. In America the Germans protect their image selling only high level vehicles. Also we don't like/want small cars in particular.

I would say Benz/BMW have prestige worldwide with no qualms. Lexus and Audi switch roles in America/Europe in regards to prestige and clearly sales.

Whats amazing is Lexus is 4th in sales with only two 4 cylinders in history and both are tiny sellers. The IS 220d and the new HS 250h.

spwolf

they have too little... look at german competition.

mmarshall

Agreed.

True, but that is starting to change. The upcoming market for luxury cars is going to be hybrids and diesels, no matter what the price range. You yourself, for example, drive a GS Hybrid. When the new CAFE laws take effect in a few more years, small luxury-hybrids like the HS250 are going to take off.

The 1-series, in America, was the right idea but the wrong engines. BMW made a srious marketing error by not making a base 4-cylinder available in America. It pushed the 1-series' base price up too high....almost overlapping that of the 3-series. Another error was not offering a xi AWD 1-series. Those two policies have cost them sales. The Lexus IS250AWD, for instance, has been enormously popular here n te D.C. area.....I see more of them than RWD models.

Audi isn't really that much different in its base marketing policy either. The A3, A4, and lower-priced versions of the A5, depending on equipment/options, all overlap, to some extent, in their price ranges. You have a point, though, about the three Lexus models all being markedly different from each other, although the three base Audi models, of course, offer sedan (A4), hatchback/wagon A3, A4), and coupe (A5). But the three Audi models offer exxentially the same drivetrains....FWD/AWD, with no RWD option. And, of course, with Audi, the A3 TDI takes the place of the HS250 hybrid.



They have sold well, though I know you don't like the new TL's looks (I don't either).

The I35 was too much like the Maxima.....a classic rebadging. That's why it didn't sell better , although I considered one when I bought my Lexus IS300.


The main reason the Maxima is selling now is that Nissan, once again, gave it a decent interior after the disaster of the first Ghosn years.


Lexus, as you note, has avoided that market for a reason. Shoppers who are looking at small SUV's usually end up looking at vehicles in the RAV4, CR-V, Rogue, Tiguan, and Outlander class.....and taking them home.

AlexusAnja

I think many confuse the relative affordability of the Lexus lineup with being entry level. I don't think Lexus has any more or less "entry" vehicles than any other Tier 1 luxo maker.

So, if Lexus decides to price their ES and IS in the 40K that would make them more not entry? Price shouldn't determine whether something is entry or not, it's the quality and luxury that should determine that.

spwolf

there will certainly be more lower and upper level Lexus vehicles (IS-F, RX450h, LS600h are where Lexus has expanded recetly, all go one step above previous offerings)... it seems all luxury makers are now going to expand their niche lineups... Small SUV is certainly coming, because European and Asian markets want small SUV. Same goes for LF-Ch, it is Euro market that needs it and why not get it in USA to for those that want it? Car is already there, it makes sense.

It only needs to feel like Lexus, luxury wise. Honestly, Lexus could even bring iQ as Lexus in USA. Car is that good... just rework the interior a bit with soft plastics and lexus feel, otherwise car is godly. Drives like freakin sports car, apsorbs bumps like an Lexus. No wonder Aston Martin is taking it.

(Cj)

Everyone had some great points. But to clarify I believe that more entry level product wouldn't be bad (read: coupes, hatchbacks, roadsters etc), but the problem I see people gripe about (at least recently, because as encore888 said 5 years ago everyone was saying their were too many SUVs) is that Lexus has too many entry sedans.

In my opinion, Lexus's entry level strategy is unlike any other luxury company. I don't know if that's a good thing or a bad thing, and I'm not sure if it's the most ideal approach to the entry level market.

For example Audi has a few sub $40K products in the US but their all different types of vehicles. They have the A3 which is sold solely as a hatchback, the A4 that is sold solely as a sedan, the A5 which is sold as coupe or convertible, and the Q5 which is a CUV.

I like this approach because there is no real overlap and it's just a more streamlined and clean approach, but it doesn't come without compromises. For example, because the A4 is the only sedan for Audi in this price segment in order for them to appeal to customers that wanted more space they had to grow the A4 4 inches (and hundreds of pounds), but at the same time that move hurts it's compact sport sedan appeal to some others.

So no way is perfect, but the real question is does having so many sedans at that price hurt Lexus's image? Also, do all of those sedans cannibalize each other? Do they limit the potential of more high end sales (particular does the ES eat into GS sales)? Would overall sales be higher if there was only one or 2 entry level sedans?

Now I know that there are reasons for Lexus's approach and it's been extremely successful for them, but I think it's something interesting to discuss. Personally I think Lexus's entry level sedan strategy is a little confusing and maybe a bit of it is overkill. With the IS and HS covering the bottom the ES could move upmarket and add a hybrid and optional AWD system. Right now very few people buy the GS because the ES is such a bargain, but if the ES were to move up a notch then the GS and ES would be equals and the main deciding factors would be FWD versus RWD/Comfort versus Sport. That might not work for Lexus and the potential backlash is too great for it to ever happen (see: Acura TL), but its an idea.

Gojirra99

Instead of moving the ES up(VERY bad idea IMO), they should just make the next GS VERY sporty to further differentialte itself from the same size ES.

ES aren't available outside most of N.America anyway, not even Japan, although I have seen them in the middle east ...