Saving Lexus Toyota's Luxury Brand Needs an Overhaul-Motor Trend
10-24-11, 05:31 AM
#1
Saving Lexus Toyota's Luxury Brand Needs an Overhaul-Motor Trend
The Big Picture: Saving Lexus
Toyota's Luxury Brand Needs an Overhaul
From the November, 2011 issue of Motor Trend
By Angus MacKenzie
Huh? Save Lexus? Toyota shook the luxury-car establishment to its core with the launch of the Lexus LS 400 in 1989. Unbelievably refined and beautifully built, the LS 400 caused utter panic in Stuttgart, forcing Mercedes-Benz to make costly last-minute revisions to its W140 S-Class in an effort to match it. Along with Honda's NSX, which caused an equal furor in Maranello, the LS 400 signaled that even Europe's grandest automakers had reason to fear the Japanese.
Two decades later, you could argue Lexus has been a failure. Outside the U.S. and Japan, Lexus is a bit player in the luxury sector. Mercedes, BMW, and Audi all sold at least 30 times more vehicles than Lexus in Europe last year. Lexus has no big coupes or convertibles, no small crossovers, no sports cars (apart from the hugely expensive and largely irrelevant LFA), no wagons, just one sport sedan, and--crucially for Europe--no V-6 diesel engine.
And the U.S. sales numbers--Lexus last year outsold both BMW and Mercedes-Benz--flatter to deceive: Lexus is overwhelmingly reliant on the RX crossover, which accounts for 45 percent of total sales and retails for between $39,000 and $47,000. By contrast, Mercedes-Benz's best-seller is the E-Class, which accounts for 26 percent of sales and retails for between $48,000 and $87,000. Mercedes sells roughly twice as many vehicles here with a base price of more than $50,000.
So what went wrong?
"Lexus was born out of a unique situation," says Toyota CEO Akio Toyoda. "A single company giving birth to two brands is unique. We wanted a car to compete with the S-Class. However, back then we did not regard Lexus as a brand, but as a distribution channel." And that's a key insight. It's why Lexus vehicles were sold for many years in Japan as Toyotas, and why Lexus did not have brand or product champions at a senior level within the Toyota organization in Nagoya.
Many of the Toyota managers who cycled through Lexus were short-termers who barely understood the concept of a luxury brand. Turning the quotidian Camry into the Lexus ES 250 was as bad an idea as it was when GM created the Cadillac Cimarron from the Chevy Cavalier, but it happened because Toyota belatedly realized Lexus dealers needed an entry-level car. The Camry's reliability and quality --and Lexus' dealership experience--meant Toyota got away with the ES 250. But it also reinforced the notion that Toyota and Lexus cars could basically be one and the same.
To fix Lexus, Akio Toyoda has created a stand-alone Lexus division responsible for the design, development, and marketing of Lexus vehicles worldwide. Its senior managers all report directly to him, an organizational structure that is unique within Toyota.
Toyoda takes the role of being Lexus' leader seriously. "I am passionate about the future of Lexus, and wanted to be personally involved. I want Lexus to be the car the most sophisticated drivers want to drive, and once they've driven one they never want to drive anything else." Yet, when asked what Lexus should stand for, his face clouds, and he pauses. "We need a clear message. That's one thing I have difficulty with: coming up with a clear definition."
The 2013 GS suggests Lexus cars will become sportier. Meanwhile, the V-6 engine is not particularly silky smooth, and the decision to retain the six-speed automatic rather than use a state-of-the-art eight-speed is unforgivable cheapskating.
Akio, just spend some time in an original LS 400. Savor the utter refinement, the aston-ishing attention to detail, and the refusal to compromise. That's where the Lexus brand DNA is buried.
http://motortrend.automotive.com/170042/1111/index.html
Toyota's Luxury Brand Needs an Overhaul
From the November, 2011 issue of Motor Trend
By Angus MacKenzie
Huh? Save Lexus? Toyota shook the luxury-car establishment to its core with the launch of the Lexus LS 400 in 1989. Unbelievably refined and beautifully built, the LS 400 caused utter panic in Stuttgart, forcing Mercedes-Benz to make costly last-minute revisions to its W140 S-Class in an effort to match it. Along with Honda's NSX, which caused an equal furor in Maranello, the LS 400 signaled that even Europe's grandest automakers had reason to fear the Japanese.
Two decades later, you could argue Lexus has been a failure. Outside the U.S. and Japan, Lexus is a bit player in the luxury sector. Mercedes, BMW, and Audi all sold at least 30 times more vehicles than Lexus in Europe last year. Lexus has no big coupes or convertibles, no small crossovers, no sports cars (apart from the hugely expensive and largely irrelevant LFA), no wagons, just one sport sedan, and--crucially for Europe--no V-6 diesel engine.
And the U.S. sales numbers--Lexus last year outsold both BMW and Mercedes-Benz--flatter to deceive: Lexus is overwhelmingly reliant on the RX crossover, which accounts for 45 percent of total sales and retails for between $39,000 and $47,000. By contrast, Mercedes-Benz's best-seller is the E-Class, which accounts for 26 percent of sales and retails for between $48,000 and $87,000. Mercedes sells roughly twice as many vehicles here with a base price of more than $50,000.
So what went wrong?
"Lexus was born out of a unique situation," says Toyota CEO Akio Toyoda. "A single company giving birth to two brands is unique. We wanted a car to compete with the S-Class. However, back then we did not regard Lexus as a brand, but as a distribution channel." And that's a key insight. It's why Lexus vehicles were sold for many years in Japan as Toyotas, and why Lexus did not have brand or product champions at a senior level within the Toyota organization in Nagoya.
Many of the Toyota managers who cycled through Lexus were short-termers who barely understood the concept of a luxury brand. Turning the quotidian Camry into the Lexus ES 250 was as bad an idea as it was when GM created the Cadillac Cimarron from the Chevy Cavalier, but it happened because Toyota belatedly realized Lexus dealers needed an entry-level car. The Camry's reliability and quality --and Lexus' dealership experience--meant Toyota got away with the ES 250. But it also reinforced the notion that Toyota and Lexus cars could basically be one and the same.
To fix Lexus, Akio Toyoda has created a stand-alone Lexus division responsible for the design, development, and marketing of Lexus vehicles worldwide. Its senior managers all report directly to him, an organizational structure that is unique within Toyota.
Toyoda takes the role of being Lexus' leader seriously. "I am passionate about the future of Lexus, and wanted to be personally involved. I want Lexus to be the car the most sophisticated drivers want to drive, and once they've driven one they never want to drive anything else." Yet, when asked what Lexus should stand for, his face clouds, and he pauses. "We need a clear message. That's one thing I have difficulty with: coming up with a clear definition."
The 2013 GS suggests Lexus cars will become sportier. Meanwhile, the V-6 engine is not particularly silky smooth, and the decision to retain the six-speed automatic rather than use a state-of-the-art eight-speed is unforgivable cheapskating.
Akio, just spend some time in an original LS 400. Savor the utter refinement, the aston-ishing attention to detail, and the refusal to compromise. That's where the Lexus brand DNA is buried.
http://motortrend.automotive.com/170042/1111/index.html
10-24-11, 09:09 AM
#7
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Interesting article, I would not say Lexus has failed, just not taking the same route that BMW and MB have.
Lexus definitely lacks in the options department, that can be both good and bad.
Where Lexus has made a mistake in the last couple years is increasing the price of the cars, but offering the same basic cars, I have plenty of friends, and neighbors who went from German to Lexus and are now back to German because Lexus offers no incentive or price savings over BMW or MB currently
Lexus definitely lacks in the options department, that can be both good and bad.
Where Lexus has made a mistake in the last couple years is increasing the price of the cars, but offering the same basic cars, I have plenty of friends, and neighbors who went from German to Lexus and are now back to German because Lexus offers no incentive or price savings over BMW or MB currently
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10-24-11, 10:47 AM
#12
Stupid MT
I won't even pick up dog poop with their mags
I can see the weakness in Lexus optioning.
They don't have a la cart options and they bundle everything in a package. Bad thing is it's a bit restrictive.
Lexus was never good at leasing, unlike bmw and mb.
This is why a majority of bmw and mb are leased-I'm sure we all know that.
I won't even pick up dog poop with their mags
Lexus definitely lacks in the options department, that can be both good and bad.
Where Lexus has made a mistake in the last couple years is increasing the price of the cars, but offering the same basic cars, I have plenty of friends, and neighbors who went from German to Lexus and are now back to German because Lexus offers no incentive or price savings over BMW or MB currently
Where Lexus has made a mistake in the last couple years is increasing the price of the cars, but offering the same basic cars, I have plenty of friends, and neighbors who went from German to Lexus and are now back to German because Lexus offers no incentive or price savings over BMW or MB currently
They don't have a la cart options and they bundle everything in a package. Bad thing is it's a bit restrictive.
Lexus was never good at leasing, unlike bmw and mb.
This is why a majority of bmw and mb are leased-I'm sure we all know that.
10-24-11, 10:51 AM
#13
Interesting article, I would not say Lexus has failed, just not taking the same route that BMW and MB have.
Lexus definitely lacks in the options department, that can be both good and bad.
Where Lexus has made a mistake in the last couple years is increasing the price of the cars, but offering the same basic cars, I have plenty of friends, and neighbors who went from German to Lexus and are now back to German because Lexus offers no incentive or price savings over BMW or MB currently
Lexus definitely lacks in the options department, that can be both good and bad.
Where Lexus has made a mistake in the last couple years is increasing the price of the cars, but offering the same basic cars, I have plenty of friends, and neighbors who went from German to Lexus and are now back to German because Lexus offers no incentive or price savings over BMW or MB currently
This was good wake-up article indeed. Lexus has not define the difference of Luxury comfort and Luxury sporty. Lexus has been lack with its engine choice and especially their sport/performance division. For all current model (except LFA) Lexus truly fullfilled the comfort/quiet segment but lack in sportness. Even the IS-F is soft vs its competitor: CTS-V, M3 & C63. I'll take my sc430 as an example. The sc430 was support to be luxury and sporty as its name "Sport Coupe". Its was so luxurious but I didn't find much sportness in it. Lacking manual/triptronic (2002~05), I can't find a way to push the engine to its limit. The engine was very smooth with endless power. However, its lacking the blast and response of a V8. I don't expect it launching like a rocket but it should haul as a V8 when you floor its. I like my SC430, but I really think Lexus should have offer manual transmission if Triptronic is not avaliable.
I also find Lexus behind on its optional freatures and the build-your-car option. Lexus dealer seems they rather sell what they have than what the buyer really want. In contrast, BMW, Audi and MB offer the option to fully personalize and build your car. Buyer just need a long wait for the delivery. The lease factor was also an important role in sales number. If Lexus have a better lease offer, I'm sure it will increase their sale.
Last edited by grabber2; 10-24-11 at 11:14 AM.
10-24-11, 11:28 AM
#14
This was good wake-up article indeed. Lexus has not define the difference of Luxury comfort and Luxury sporty. Lexus has been lack with its engine choice and especially their sport/performance division. For all current model (except LFA) Lexus truly fullfilled the comfort/quiet segment but lack in sportness. Even the IS-F is soft vs its competitor: CTS-V, M3 & C63. I'll take my sc430 as an example. The sc430 was support to be luxury and sporty as its name "Sport Coupe". Its was so luxurious but I didn't find much sportness in it. Lacking manual/triptronic (2002~05), I can't find a way to push the engine to its limit. The engine was very smooth with endless power. However, its lacking the blast and response of a V8. I don't expect it launching like a rocket but it should haul as a V8 when you floor its. I like my SC430, but I really think Lexus should have offer manual transmission if Triptronic is not avaliable.
I also find Lexus behind on its optional freatures and the build-your-car option. Lexus dealer seems they rather sell what they have than what the buyer really want. In contrast, BMW, Audi and MB offer the option to fully personalize and build your car. Buyer just need a long wait for the delivery. The lease factor was also an important role in sales number. If Lexus have a better lease offer, I'm sure it will increase their sale.
really?
:-)
