Toyota to Offer Lexus Rebates to Spur Brand's U.S. Sales
By MIKE RAMSEY

LAS VEGAS—Toyota Motor Corp. plans to offer rebates of up to $3,000 as well as subsidized financing on certain models in its Lexus brand as part of a drive to help the luxury brand goose sales and pass rival Mercedes-Benz by the end of the year, according to two people briefed by the company at a dealer meeting here.

Lexus has been the top-selling luxury make in the U.S. market for more than a decade but has fallen behind Mercedes this year. In the first nine months of 2010, Lexus has sold 162,438 vehicles, just behind Mercedes's total of 165,362.

At a gathering of Lexus dealers from across the country–the first such meeting in two years—company executives said Toyota is prepared to boost incentives in the next few weeks to spur sales, these people said. The incentives will low-interest financing and subsidized leases in addition to rebates, they said.

The meeting included an address by Toyota Chief Executive Akio Toyoda and was designed to fire up dealers after a rough year. Toyota and Lexus suffered sales slumps after quality and safety problems flared up earlier this year that were related to complaints some of their vehicles had a tendency to accelerate suddenly on their own.

Toyota eventually recalled more than eight million vehicles to fix problems with floor mats and gas pedals, and was ordered by U.S. regulators to pay a fine of $16.4 million, the maximum possible, for failing to report safety defects promptly enough.

Lexus's sales have increased just 8.7% so far this year, while the overall market has grown 10.3% and Mercedes's sales have jumped 21.3%.

Lexus is still ringing up strong sales of its RX sport-utility vehicle, but increasing numbers of consumers have come to see the look of some other Lexus models as uninspiring.

In Las Vegas, people briefed by Toyota said, dealers were told Lexus is planning a new advertising spots showing an RX 350 on top of a copy machine spitting out pictures of Mercedes and BMW models–implying competitors are trying to follow Lexus in the luxury SUV segment

Dealers were also shown a version of the 2013 Lexus GS sedan, which will be redesigned for that model year, these people said.

Toyota's leadership also is intent on appealing to younger buyers and is making a push in that direction. The average Lexus owner is 59 years old. Mercedes-Benz customers are 54 and BMW owners are 52 on average, according to Strategic Vision.

Lexus' efforts to gain more younger buyers can be seen in the new CT 200h, a five-door compact hybrid that will go on sale early next year in the U.S. Lexus also begins delivering its $375,000 carbon-fiber-wrapped LFA in January. The super sports car is a personal project of Mr. Toyoda, who is trying to put more juice in the auto maker's designs and powertrains.