Lexus losing to Germans in sales chase

Lexus enjoyed one of its more successful years in the Australian market during 2014, but its sales figures suggest anything but that.

According to VFACTS, precisely 7000 vehicles were sold by the Japanese prestige brand last year, but that was just 80 more sales than for the year before – equating to a percentage increase of 1.16 per cent.

In contrast, competitors in the same market segments enjoyed a bumper year in 2014 (see table below). The difference, according to Lexus Australia Chief Executive Sean Hanley is the breadth of product portfolio the other brands can draw on. But Lexus will catch up a little, now that the NX SUV has arrived, and the RC F hero model is due for launch this week.

Says Hanley, the NX will be a major player in the local Lexus range, once supply for the local market is ironed out.

"Global demand [for] the hybrid's been exceptional for NX – which is great in every way, but it's caused us a slight delay. We've taken 234 orders on the Turbo in just five days," he told motoring.com.au last week, during the launch of the NX 200t.

VFACTS figures can be misleading, Hanley suggests. That's never more so than where the IS model is concerned. The Lexus counterpart to the BMW 3 Series and Mercedes C-Class, the IS sold out in what Hanley called a "big year-end result," but that left Lexus dealers in Australia with little in the way of stock for January of this year.

Hanley admits that the German rivals to Lexus are often selling up to three or four times the sales volumes that Lexus is, and even brands like Jaguar Land Rover are experiencing stronger growth than Lexus – either in percentage terms alone (Jaguar, with neither an SUV to its name nor a 3 Series competitor... yet), or in both percentage and sales volume numbers (Land Rover). The Lexus chief does anticipate that the brand will begin to claw back some of that lost ground this year.

"The luxury market is growing, there's no doubt about that," he said. "Our product cycle saw the majority of our cars come out at the end of last year and early this year. The full benefit of those will be realised over '15, I've got no doubt.

"The reality is, with Lexus, we don't have vehicles in all the markets that the three German competitors have vehicles in, so therefore it stands to reason that they're going to sell more.

"But being the market leader is not the main game for Lexus. Being good in the segments that we compete in, is what we're about.

"We believe that now we've launched exciting new performance product [and] we've launched product in a market that's the biggest growth market in Australia, in the SUV segment, we think that the brand right now will go through a growth phase – probably of around five to 10 per cent a year. Will it take us to leadership? That's not the goal."

That percentage growth number does seem to be what Lexus needs to achieve, given JLR is already doing so, and the three German brands last year achieved at least 10 per cent (BMW), with Audi finishing in third spot, after a blistering year of over 20 per cent growth. For his part, Hanley hints that brand image will hold Lexus back in the short term. It has been a long-standing refrain from him and his predecessor in the same role – Tony Cramb.

"It's a safe brand – and being a safe brand has served us well," Hanley said. "What we've got to do is take it from safe to exciting."

To get there, Lexus has to nail its colours to the mast of performance motoring and serious, bush-bashing, four-wheel drives. The company already has LFA, IS F, RC F and the LC-LF concept car to showcase its performance credentials.

As against those, however, Mercedes-Benz offers AMG (SLS & GT), A 45 AMG, C 63 AMG (sedan, wagon and coupe variants), E 63, S 63, S 65, SL 63 AMG and a host of AMG variants based on cars as disparate as CLA, CLS and M-Class (soon to be GLE). The sheer diversity of performance available from Stuttgart is almost beyond belief. It's a similar situation at Munich and Ingolstadt too, with in-house performance tuning available across sedans, coupes (of the two- and four-door variety), convertibles, liftbacks, SUVs and conventional wagons. All three of the German prestige brands (and Porsche too) have motor sport heritages that support the underlying performance reputation of the road-going product.

But while the performance models are missing from the Lexus range, the greater need, it might be argued is for diesel-powered SUVs. Hanley says that Lexus stands by its hybrid-drive reputation. Ironically, that's where the Germans have their work cut out catching Lexus, given the trend of European emissions legislation. But the local Lexus exec does admit that he would dearly love to market an LX model (LX 570 pictured) with the same diesel V8 under the hood as the donor car, the Toyota LandCruiser 200 Series.

"It's a steady seller for us; and there's a definite market for it," he said. "We have a very loyal... steady market [for the LX] and we certainly have no plans to discontinue that car.

"I'll say this about LX, at the moment obviously LX is only available in a petrol variant... there's no plans for a diesel LX. Having said that, there's a market for a diesel LX, I've no doubt about that. So if it did become available and if it was a possibility – and in no way does this take away from my commitment to hybrid technology – but in that large SUV segment there exists market for a diesel.

"Therefore, if it became available ever, we'd certainly take it."