GS69

Lexus Distances Itself from Toyota as It Seeks to Regain Luxury Crown

Lexus wants BMW and Mercedes-Benz car buyers to know it can be more than just dependable.

To promote the revamped GS series, Lexus said that Sports Illustrated model Tori Praver helped to inspire a track challenged by American car-racing ace Scott Pruett, while armchair drivers keen to join in the action can get the Tori 500 app for the iPhone and iPad. The publicity helped Lexus sell more than 4,900 GS cars in the U.S. within 2 months of its introduction, exceeding sales for all of 2011.

It’s part of an effort by Lexus to separate itself from parent Toyota Motors Corp.’s stable -- at least a little -- and come up with a global strategy that gives BMW and Mercedes-Benz owners a reason to switch.

"To conquer BMW and Mercedes drivers, we can’t just be looked at as an upgraded version of Toyota,” said Kiyotaka Ise, who took the helm of Lexus in 2007. “We want our brand to be chosen for its character and handling.”

It’s also larger than Lexus itself. Toyota is stressing bolder style and what it calls “emotional designs” under a companywide revamp to foster creativity, streamline decision- making and get cars faster to market. The success of the Lexus strategy will signal whether Toyota can revive sales growth marred by output disruptions from natural disasters, a stronger yen and laggard introductions of new cars.

Hourglass-like grill

“Lexus is leading the way in how the entire Toyota Motor Corporation should operate,” Toyota President Akio Toyoda said at the world premier of the GS in August last year at Pebble Beach, Calif.

In an early sign of Lexus’s shift from the parent, Toyota’s headquarters rearranged desks so engineers and designers of the luxury marque founded in 1989 were separated from their Toyota- brand peers 4 years ago. The team’s independent brainstorming on the redevelopment of the GS led to an hourglass-like spindle grill becoming the common design element for new Lexus models.

“What was missing for Lexus was a centralized brand image,” said Takashi Aoki, a senior fund manager at Mizuho Asset Management Co. in Tokyo. “If you compared an entry-level Lexus car to that of BMW, the impression that Lexus gave was nowhere near the luxury image BMW’s car had.”

The revamped GS will test whether greater autonomy can help Lexus reclaim the crown it held for 11 years and lost to BMW in 2011 as the top-selling luxury car in the U.S.

Unified branding

Under a Toyota development plan unveiled last month, Lexus cars will be promoted based on “unified global branding.” That contrasts with Toyota-brand models, for which the parent company will group managers into 3 regions to better cater to local demand.

“When BMW or Mercedes owners talk about their cars, what matters to them is that they own a BMW, a car that’s a part of that brand, not which model,” Lexus’s Ise said in an interview from Miyazaki, south of Tokyo, after a test drive for the GS.

The BMW brand and Daimler AG’s Mercedes-Benz marque are each about 10 times more valuable than the $2.55 billion estimated for the Lexus name, according to research by Interbrand. Toyota, the highest ranking car brand with a value of $27.8 billion, placed 11th on the consultancy’s top 100 list, which was led by Coca-Cola Co.

“For any successful brand, you need to make sure there’s some distance,” said Karl Schlicht, general manager for product and marketing planning at Lexus. “We don’t want to be known as a Toyota plus; that’s not what people pay for premium.”

Weaker retention

Lexus topped a survey on dependable automakers issued by J.D. Power & Associates in February. Toyota, maker of the fuel-efficient Prius, led the overall industry with the fewest problems reported by car owners, the survey showed.

Still, Lexus’s ability to retain customers when they buy a new vehicle trails that for BMW and Mercedes-Benz, Westlake Village, Calif.-based J.D. Power said in January.

About 30% of Lexus owners typically leave for Mercedes-Benz or BMW cars, according to Toshio Bando, manager of the brand support group for Lexus. With the push for a more unified brand image, Lexus expects stronger loyalty, he said.

“The GS now has the moves to compete with those 2 German brands, and it hasn’t lost the quiet refinement we’ve come to expect of Lexus,” Tony Quiroga wrote in Car and Driver. The GS “is more aggressive than Lexuses of the past,” Quiroga said.

The GS 350 F Sport, in particular, “is an impressive redesign” that’s “actually fun to drive,” according to car researcher Edmunds.com.

‘No pleasure’

Toyoda rejected at least 3 prototypes before giving the green light to the new GS, said Kazuo Ohara, a senior managing officer at Lexus. Had the current design not materialized, the president would have killed the entire series because “there was no pleasure in them,” he said.

Under Toyoda, the automaker also rolled out the 1st Lexus supercar, the $375,000 LFA, targeted at drivers of high-end sports models from Porsche AG, Ferrari SpA and Lamborghini SpA.

In the outline of the April 9 plan, Toyota said it has reduced the number of people who review new designs to speed up decision-making. The team screening Lexus designs has been cut by half, Ise said, without providing a figure.

“We used to depend on Toyota’s scoring system and the opinions of executives who had nothing to do with the brand,” the Lexus chief said. “When you try to please many people, you end up with a bland product with no character.”

Prepared for haters

Even so, Toyota’s engineering helped Lexus reign as the best-selling U.S. luxury car for more than a decade and won’t be entirely removed from Lexus’s make up, Ohara said. Lexus will continue to use Toyota’s hybrid-engine technology as that remains 1 of the biggest selling points for the luxury marque, he said.

The brand plans to boost U.S. sales by more than 25% this year after the revamp, Ohara said.

Lexus sold 6,960 GS cars in the U.S. as of April 30, following the introduction of the redesigned series in February, based on monthly figures provided by Toyota.

Among middle-luxury models, the brand sold 3,443 GS cars in the U.S. last year, compared with 51,491 for the BMW 5 series, according to Autodata Corp.

The push to strengthen loyalty among Lexus owners may drive away some customers like Tetsuji Inamoto, a 45-year-old entrepreneur living in Tokyo, who considered switching from his BMW 5 series to Lexus’s IS 350 sedan.

“The new design wasn’t what I’d imagined,” said Inamoto, who said he spent several weekends visiting Lexus dealerships. “My image of the brand went from being a sophisticated one to one geared toward a younger audience.”

Still, Lexus said it would rather be shunned by some buyers than be without a distinct identity.

“There will be lovers and there will be haters, but we are prepared for that,” Ohara said.

“What we want more than anything in this rebirth is for unity among our Lexus lineup,” he said. “A design that anyone and everyone likes is boring.”

Hoovey689

iTrader: (16)

Talking about change is one thing, actually taking action is another. Toyota and Lexus are doing a great job. The ***** in your court Honda/Acura

mmarshall

This attitude is exactly what is wrong with the way a lot of today's vehicles are marketed....and it seems to be a direct result of pressure from enthusiasts and the automotive press. People need to stop concentrating on so-called "Image" and look more at what kind of car what you are actually getting under the skin. You're spending your hard-earned money for a car, not a image ....and you need, more than anything, to know what that money is going to buy in terms of relability, durability, depreciation, driving characteristics, comfort, ergonomics, practicality, insurance-costs, etc..... Keeping up with the Jones's may be one thing, but remember that one has to live with that vehicle, day in and day out, and with the consequences of his or her decision.

I8ABMR

I am happy to hear that they are serious about this. Reliability can only take you so far. The cars need to designed to provide a better driving experience and one that will make owners as enthusiastic and passionate as we would see with BMW or even Mercedes

speedflex

Not sure I agree that image marketing is driven by the Auto press and enthusiasts. The average car shopper aspires to the makes and they do it because they perceive them to be the ones which project success and wealth. I dare say that that is THE reason driving the purchase of luxury cars. The line between design and features which are available to the mainstream and luxury buyer seems to narrow every year. Today's Altima, Accord, Camry, Maxima, Taurus, 300, etc, were yesterday's BMW and Benz content, performance, and design-wise.

I would say the vast majority of people who buy luxury cars is because of the badge, not the measurable excellence it has over the mainstream car. I would say that these luxury brands market to a customer segment who has a set of specific expectations.

For the record, I agree with your sentiments, though. I think prestige badges are over-rated and create a false sense of superiority.

Hoovey689

iTrader: (16)

agree with most of your opinion especially over the "badge" and creating a false sense of security. Design however is pretty subjective. A 5 year old BMW and a 5 year old Taurus are certainly different, but a current Taurus and a 5 year old BMW are not similar from that design standpoint. A design theme such as the term Bold depicts many cars nowadays whether its mainstream or luxury, but the design language couldn't be more different. Newer Fords and Hyundai's for example are more "fluid" in design whereas BMWs and MBZs are more "tailored"

oohpapi44

iTrader: (1)

If nothing else, they've hired a great PR team to explain away years of mediocrity.... lol at a centralized brand being the reason for lack of sales for previous owners versus not having a product that improved enough to be worth buying if your initial purchase was a GS400

speedflex

Good points. I wasn't talking about styling but features, technology refinement and design. A garden variety Accord can be equiped and drive as well as some ultra luxury cars form only a couple of years ago. In some cases there's little subjective difference in the luxury inside a Camry, Maxima, Taurus or other such car than the equivalent luxury make. Bluetooth, heated seats, GPS, Satellite FM, back-up cameras, even self parking... it's all there.

But people who can afford a Benz, BMW, Lexus, will not settle for less even though they can nearly all this luxury content and comfort for less. Why? Mainly because of the badge and the customer experience.

Hoovey689

iTrader: (16)

gotcha

part of that too is though that tech is pioneered by luxury makes, its implemented and streamlined to the point where a once luxury feature can be had on the mainstream market. point in case the LS460 and self parking. The 2012 Ford Focus can be had with an active park assist option for $695 !! You can get heated REAR seats on some Kia's and Hyundai's.

But at the end of the day Badge matters A LOT to some people

Wallie3145

Image wise there is no difference between a Lexus and a Toyota. They are both boring cars to drive.

bitkahuna

iTrader: (20)

You're far too logical. . you could never make it in marketing!

LexFather

I agree on some points but disagree on some. You simply cannot fool people with bad product. Tier 1 luxury brands like BMW, Benz, Lexus in America have proven over decades why people can trust the badge. With most every product they put out a very solid effort, they market brilliantly and everything else is just icing on the cake. The badges are not shallow. Contrarily some brands are shallow behind the badge, the badge means nothing and yes people buy b/c of the badge.

Everytime mainstream cars get better, so do luxury cars. You can't get HUD or LED headlights or a TT V-8 or high power hybrids in mainstream cars. You can't get wood seemingly picked from some grand place. You get leather in a mainstream car that is cheap and wears and eventually looks terrible. You get speaker systems in mainstream cars that have a lot of speakers but they sound terrible compared to a luxury car.

Then as Hoovey said over time, the different in build quality is staggering. A 1980s S-class still has a solidarity that most mainstream cars can only dream of matching. If someone offered me a 2004 BMW 530 and a 2012 Mainstream Camry/Fusion etc, I'll take the BMW every time. You can keep your heated rear seats.

I am so happy Mr. Toyoda is at the helm right now.

Hoovey689

iTrader: (16)

trolls will be trolls

speedflex

Don't get me wrong. You should and do get a superior product simply because the price-point demands it. People like us, who are into cars, can tell the difference in the details. But most people aren't sensitive to those details and end up buying a prestige brand simply because it's a prestige brand. I bet most people couldn't even articulate why they aspire to own a luxury car beyond the fact that the brand is aspirational. In other words, the need to strut the strut.

But to the point that Mmarshall was making, I think customers have had more to do with elevating these brands to status symbols than any marketing effort. The marketing is simply projecting an image appropriate to expectations.

And ditto on Mr Toyoda. The GS-F was just favorably compared to the 525. Press like that, along with brand messaging, is doing much to change Lexus' image.

http://www.thetruthaboutcars.com/201...us-gs-350-awd/

jwong77

I read this too, and it seems they have the right product. Its really down to how they can properly convey this message to the buyer.