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NEWS
Lexus won't go downmarket
Japanese luxury brand questions BMW, Benz and Audi going cheaper and smallerToyota’s Lexus luxury division will not try to match rivals BMW, Mercedes-Benz and Audi for million-plus global sales per annum and nor will it pursue them downmarket.
Instead, concerned that smaller, cheaper cars damage the image of a luxury brand, it has decreed an expanded CT hatch lineup will remain its entry point, joined by the NX compact SUV that launches in 2014.
The CT is currently only available as a 200h petrol-electric hybrid, but one of Lexus’ most senior global executives has strongly hinted to motoring.com.au a higher performance model is in the pipeline.
The CT is due for its first facelift in 2014 and the new second generation is due in 2016.
“I think that as we develop CTs for the future you are going to see us get us a lot more bang for our buck,” Lexus International executive vice president Mark Templin told motoring.com.au.
“We missed a segment of the market for people who want fast cars. A lot of people liked the looks of the CT and liked the way it drove, so they wanted something faster. So yeah sure in the future, I hope we can account for that.”
Templin said Lexus there was no need to head further downmarket than CT because Lexus was part of the much larger Toyota Motor Corporation and therefore not subject to the same regulatory pressures as its European rivals.
“Corporate average fuel economy is impacting us all over the world, even in the Middle East where gas is 99 cents per gallon they are enacting CAFE standards,” Templin explained.
“So everyone is going to have to figure out how to have a portfolio of products that allows you to have a CAFE to beat those regulations. Right now, selling a limited number of cars, it’s more difficult for them [BMW et al] because they don’t have all those Priuses, all those Corollas, all those Yarises and all those other small cars to allow them to offset what they are doing.”
And while pushing downmarket will lower fuel economy averages and increase sales, Templin questioned the impact that would have on a luxury car brand.
“To do what they have to do long term with regulations they may have to go further down. At some point in time if you are selling a $20,000 car and $200,000 cars at the same time in the same showroom ... then is it really a special brand any more?
“I think we are going to have to redefine what luxury means. If people are starting to sell $20,000 BMWs and Mercedes-Benzes do you call them luxury cars? I don’t.
“We have no plans to go below where we are now and I think we want to concentrate on the real luxury products, making them very special.”
Lexus sold 476,566 vehicles globally in 2012, which is roughly one third of each of its three German rivals. Its all time record was in pre-GFC 2007 when it sold 518,200 vehicles.
Lexus was the leading luxury sales brand in the USA for 11 years until the 2011 tsunami hit inventory and it now sits at number three behind BMW and Benz. In Australia it trails Audi as well.
“Our goal is to be a top tier brand and that doesn’t mean we want to be the biggest volume brand,” said Templin. “But we do want to be considered one of the best brands in luxury.
“So we want to be known for having better quality than anyone, providing a better customer experience than anyone and creating passion around the brand so people think of us in a special way like you do Mercedes and BMW.”
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Written byBruce Newton
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