Diesel no-show for Lexus LX

Lexus has comprehensively shut down any talk of its LX SUV scoring a diesel variant for the Australian market.

During the launch of the refreshed LX 570 last week, the prestige importer's chief executive, Sean Hanley, was questioned at length by journalists concerning the diesel variant that has been developed for mainly European markets.

Hanley was unequivocal that the diesel LX will not be coming to Australia, and furthermore it's a decision made by Lexus Australia, not the factory. Determining exactly why was a protracted process, with Hanley initially telling the assembled journalists that the diesel LX had been ruled out for Australia due to its lack of "refinement", which most journalists understood to mean too much driveline NVH in the diesel variant.

Indeed, even in Hanley's opening response, the implication was that the diesel engine was at the heart of the vehicle's unrefined disposition.

"Not at this stage," he answered the first question. "The LX is a real flagship car for Lexus in Australia, so the luxury, refinement and the refinement that petrol engine provides aligns very well to where we see the LX in our market."

For the next 15 minutes, Hanley deflected questions, revealing little about the rationale for leaving the diesel LX off the agenda in a country like Australia, where diesel and SUV make a very natural pairing.

"We understand that there's LX diesels available in other parts of the world, but... we have no intentions of bringing diesel to the market until such time as that refinement [is] aligned with what we want to deliver to our customers in the Australian marketplace," Hanley continued.

The message was further confused when the Lexus boss noted the brand's well established commitment to hybrid-drive technology, only to dismiss any question the LX will be offered as a hybrid at some point.

"Things like NVH [and] refinement are really important for the LX as a flagship in Australia. Right now we don't see the diesel option as an option that we could bring to this country. We are of course heavily focused on a hybrid strategy at Lexus in Australia, [and] we will continue to go down that path.

"But in the event that a suitable diesel variant becomes available, that offered the luxury refinement that we expect to be able to deliver in the Australian market, we could certainly look at it, but there's no plan for it."

Once the subject of a hybrid-drive system for the LX was raised, it wasn't easily packed back into the box.

"I'm just saying that petrol's our direction at the moment, and we have no intention of bringing a diesel to market at this time," Hanley said.

"I think the hybrid strategy for Lexus is evolving all the time, so it's not beyond possibility for certain. Certainly there are no plans to bring a hybrid-petrol LX to market, but it's not beyond the realms of possibility going forward, in terms of our product development for the future.

"It is something that if it was to become available, it would be great for the Australian market. But I can absolutely tell you, categorically, there are no plans for that technology of powertrain, as I sit here today, that I am aware of."

Asked whether Lexus was actively working on a diesel LX that would meet the standards set for it by Lexus Australia, Hanley said that he had heard nothing along those lines.

"Not that I'm aware of... I'm not aware of any developments of diesel for LX – outside of what we have available in some European areas now.

As for testing of the diesel LX in Australia, that's a complete furphy says the Lexus exec, despite the diesel LX being homologated in accordance with Australian Design Rules.

"Never had it here. Never tested it, never had it here," Hanley said.

That prompted the obvious question, how then did Lexus Australia arrive at the conclusion the diesel LX wasn't good enough?

"I'm not saying it's not good enough, it just doesn't align to where we see our LX right now," Hanley explained. "We're aware of the specification available for that car, and we put LX into the market at a very high luxury, highly-refined specification level. And at this stage, there's nothing suitable in the world market that we believe we could bring to the Australian market in terms of specification – not actually engine specification, we're talking overall."

From that, it began to dawn on some of the slower-witted journalists in the room – this writer included – that the problem with the diesel LX rests with trim and equipment, rather than the engine itself. This was basically confirmed by Hanley.

"It's not made to the Australian standards that we would normally bring this car to market. When you have a look at the LX today, it has very high levels of luxury, refinement, specification... Now what I'm saying is that the specification available on the global market right now – or European markets – is not suitable for what we would want to bring that car to market with.

"LX here is a high-level, refined, luxury flagship car. It's important that we deliver that to the Australian market. Other countries have varying levels of specification requirements, and at the moment those specification levels just don't align to where we have the LX positioned in this market. It doesn't mean they're wrong; it doesn't mean they're insufficient, it just means that our market is different.

"To bring a diesel to market would mean that we would have to reduce specifications; it does not align to where we position that car in Australia. That's the short answer.

"There's nothing wrong with the engine; the engine capability, the engine quality is perfect. There's no problems at all. However, where we position the LX 570 in Australia as a flagship luxury vehicle, then it's important that if we were to ever bring a diesel – if we were, and there's no plans to bring a diesel to market – that we absolutely would not compromise on any luxury specification, whether it be safety, technical or refinement.

"We generally take a very high level of specification... Our base models generally come very well specced."

Asked whether a diesel LX for Australia would be positioned above or below the petrol model, Hanley dismissed that scenario as 'hypothetical'.

"It's kind of a hypothetical question, because truly? There is no diesel on the horizon for the Australian market, so to be truthful I've never considered it."

That, presuming the diesel variant could be brought up to the same general level of trim as the LX 570, hints that the diesel LX would be too expensive in this market. Naturally that prompted a further question concerning the business case for the diesel variant. Hanley insinuated that the business case wasn't the problem; what began to emerge from the questioning was that Lexus won't built a diesel LX to the same level of trim as the LX 570 sold here, and Lexus Australia, selling the LX 570 at a rate of around 10 units a month, isn't pushing for it either.

"We wouldn't be able to bring a car to market with a diesel engine – at this point in time – with the high levels of specification we would need to bring to the Australian market," Hanley said.

"Therefore, at this particular period we have no plans to bring that car to market, unless at some time in the future we can deliver it with high levels of specification aligned to where we expect this car to be positioned in the Australian market."

There is significant demand for diesel engines in premium SUVs, as Hanley admitted. The Lexus boss has said in the past that he would welcome a diesel LX when he previously spoke to motoring.com.au in February, which is why the sudden apparent change of direction is so unexpected.

"In that LX large SUV market there does exist a diesel market – at the top end," he acknowledged. "Unless we could bring that technology and drivetrain to market with the high levels of specification that we expect to deliver to our consumers, that the Lexus customers expect to have delivered to them, then we would not bring it to market. We will not compromise the luxury experience to bring diesel to market in the large SUV."

Asked whether this was handed down by the factory, Hanley said that the decision had been made locally.

"We can get any Lexus model we want... There is no restriction on what Australia can take...

"We made the decision not to take diesel... on the basis that we wanted more specification. And at this time, it wasn't available. In the future, it may be, and that may be a decision we have to review at some point... It's not high on the agenda though."

In Australia, no one has been surveyed for their views on whether they would purchase a diesel LX. The decision is based on internal analysis and business case study only.

"We didn't do any market research on a diesel at all," Hanley said. "We did some planning numbers that we thought may be applicable, however again, when the specification menu was provided to us we opted not to take diesel in the Australian market. That continues to be our plan."

And what was missing from the equipment list?

"I don't want to go into detail... the car was built clearly for other markets, works well in other markets, but just didn't align to where we position the LX here."

As a postscript, the launch of the new model year LX 570 in Australia was Sean Hanley's last official act as the chief executive for Lexus Australia. It was announced yesterday that Hanley has been appointed Divisional Manager Sales with Toyota Australia, ahead of its migration from manufacturing to full importation. Toyota stalwart Peter McGregor will take Hanley's place as head of Lexus Australia.