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Will Lexus Regain The Luxury Sales Lead In '13?

hpmctorquehpmctorque Posts: 4,205
edited January 3 in Lexus
From today's New York Times...

"Toyota Moves to Revamp Its Lexus Luxury Line

By BILL VLASIC
Published: September 26, 2012

DETROIT — With a strong comeback under way in mainstream sedans and S.U.V.’s, Toyota Motor is now hoping to rejuvenate its Lexus brand by appealing to younger and more adventurous buyers.

A 2013 Lexus LS 460 F sport model. Toyota Motor is hoping to appeal to younger buyers.

The automaker has recovered most of the United States market share its Toyota brand lost last year from inventory shortages because of the earthquake and tsunami in Japan. Now its Lexus brand is gaining steam with a revamped product lineup, including sporty new variations of cars like its flagship LS sedan.

Industry analysts said the flashier grilles and interiors on the new Lexus models served notice that the brand was no longer aimed at older, more conservative buyers.

'Lexus is bringing passion back to the showroom by being aggressive in styling and performance with their new models in hopes of attracting a younger demographic,' said Jesse Toprak, an analyst with the auto research site TrueCar.com.

Lexus sales rose 24.8 percent in the first eight months of this year. While the brand is unlikely to pass the luxury leaders BMW and Mercedes-Benz anytime soon, it is gaining fast on the German manufacturers. (Toyota brand sales are up 31.1 percent in the United States; the overall market in the United States is up 14.7 percent.)

Lexus was the best-selling luxury brand in the United States for 11 consecutive years until 2011. But product shortages allowed both BMW and Mercedes to overtake it last year. The brand also had lost some of its prestige because of consumer concerns about sudden acceleration linked to faulty floor mats and other equipment problems.

The top Lexus sales executive in the United States said Wednesday at a media event in Detroit that overtaking BMW and Mercedes was not a priority for now.

'We don’t care who is No. 1 at the end of the year,' said Tim Morrison, a vice president. 'Being No. 1 with the customer is what we need to focus on.'

Toyota has moved aggressively to upgrade the Lexus lineup with bolder designs and state-of-the-art safety features like collision avoidance systems.

And because Lexus had a blander image than BMW, Toyota has added high-performance variations called F Sport.

The new F Sport version of the LS full-size sedan comes with all-wheel-drive, an 8-speed transmission and a V-8 engine that generates 386 horsepower.

The new LS sedan goes on sale in November. This year, Lexus introduced redesigned versions of its smaller GS and ES sedans and its top seller, the RX sport utility vehicle.

Mr. Morrison said the addition of the F Sport variations of the RX and LS would not only add incremental sales, but would also add some sizzle to the brand’s image.

'It’s starting to change the image,' he said. 'The typical RX buyer is in their mid-50s, but the F Sport buyer is three to four years younger.'

Lexus has consistently won honors for quality and reliability from consumer research firms like J. D. Power & Associates. It has also led the luxury market in providing fuel-efficient, gas-electric hybrid versions of its models.

But its cachet has faded somewhat in recent years, particularly as rivals like BMW and Volkswagen’s Audi brand have brought out better-performing cars with stylish designs.

'Lexus was traditionally a conservative choice for consumers who wanted a well-built, reliable luxury vehicle,' Mr. Toprak said.

The F Sport variations are meant to lure buyers who considered previous Lexus models too bland.

Mr. Morrison said that Lexus expected to sell about 1,000 of the new LS sedans a month in the United States, with about 10 percent of those being F Sport models.

Lexus sold 150,000 vehicles in the United States in the first eight months of this year. Mercedes, by comparison, sold 168,000 cars and S.U.V.’s, and BMW sold 164,000.

Mr. Morrison said he expected full-year sales for the brand to reach about 240,000 vehicles. That total would put it within striking distance of the German leaders, and in position to possibly regain the luxury sales crown next year when it reaches full production for all its models.

Lexus is not overhauling its refined image entirely, but the addition of the faster F Sport models should broaden its appeal.

'Lexus is going to continue to look like Lexus,' Mr. Morrison said. 'But it will have a little more performance for customers who want it.'

Lexus will likely finish behind BMW and Mercedes in U.S. sales in 2012, but what about 2013? With Audi, Infiniti, Cadillac, Acura, Volvo and Lincoln aggressivviely going after a larger piece of the action, it'll be interesting to see from which of the top four brands they take the most sales away.

Comments

  • hpmctorquehpmctorque Posts: 4,205
    "...This year, Lexus is on track for a 20% increase in sales, said Tim Morrison, vice president of Lexus sales and dealer development.

    'We had a huge August,' Morrison said, with 24,237 sales compared with 22,686 for Mercedes and 16,835 for BMW. 'I thought they would be up near us and they weren't.'..."
  • fintailfintail Posts: 33,776
    Lots of new (or facelifted) product, all at once. Not too surprising to me.
  • hpmctorquehpmctorque Posts: 4,205
    edited September 2012
    Of course, the Germans are not a static target. When the 1990 LS 400 was introduced, with stellar reviews in terms of product and value, the press gave the impression that Mercedes' dominance of the luxury market was probably over. Well, it didn't quite turn out that way, in that MB improved quality and adjusted its pricing. Lexus fought its way to #1 in the U.S., but not worldwide. It could be argued that, from global perspective, the LS400 was the best thing that could have happened to MB. That's may be an exaggeration, but it points out the benefits of competition.

    Going back further, who, in the '60s, would have thought that any brand would have seriously challenged Cadillac? If Lincoln couldn't, who could?

    Now, much more than then, we have to think internationally. MB, BMW and Audi comprise ~75% of the Chinese luxury car market. The incremental volume from China helps reduce unit prices in other markets.
  • fintailfintail Posts: 33,776
    I think the quality issue came immediately after Lexus. The Germans went into a panic, and brought out some iffy products with cost cutting that really left a mark. But the pricing point is very true - adjusted for inflation, a new S550 is significantly cheaper than a new 500SEL in 1992.

    The first LS was like a reverse engineered and updated W126. Many of the design angles are virtually identical. It took some of the edge off MB executive arrogance, perhaps. They have learned smaller profit margins are a new reality. Also it was at a time when the US market was more important, and the LS was definitely tuned to US tastes.
  • hpmctorquehpmctorque Posts: 4,205
    DETROIT (Bloomberg) -- "Daimler AG's Mercedes-Benz, after a 7 percent sales gain in September, extended its lead over BMW to 5,221 units after nine months in the race to be the No. 1 U.S. luxury auto brand.

    Mercedes, helped by updated versions of the C-Class compact sedan and GLK compact sport-utility vehicle, sold 23,156 vehicles in the U.S. last month, the automaker said today in a statement. BMW's U.S. sales rose 0.1 percent to 21,761 in September compared with the same month a year earlier. Toyota Motor Corp.'s Lexus rose 36 percent to 20,386."
  • lemkolemko Posts: 15,178
    If M-B kept going in its pre-Lexus direction, you'd have an E-Class that was built and engineered as solid as a Tiger tank and cost $150K!
  • fintailfintail Posts: 33,776
    I do have to credit Lexus with price competition. Sadly, it created a period of quality issues.

    1992 500SEL based at roughly 85K, 2012 S550 bases at roughly 95K. 1992 190E based around 30K, 2012 C250 bases around 35K. That says something.
  • steverstever Viva Las CrucesPosts: 40,781
    Lousy sales in Europe means more buys for US luxury consumers.

    "Germany's three big luxury auto makers racked up record U.S. sales in November, fueled by aggressive holiday promotions and new models.

    The German brands have used a combination of incentives to woo customers, including cash rebates, early lease buyouts and cheap leases. BMW and Mercedes are pushing aggressively to claim the crown as the top-selling luxury brand in the U.S.

    Boosting U.S. sales is especially critical for the German luxury brands because demand in Europe is declining, and is expected to remain depressed for some time, according to industry executives.

    BMW and Mercedes both are on track to beat the Lexus brand of Japan's Toyota Motor Corp. for the second year in a row."

    German Luxury-Car Brands Surge in U.S. (WSJ)

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  • steverstever Viva Las CrucesPosts: 40,781
    "BMW AG's U.S. sales surged 39 percent in December, powered by the 5 Series car line, helping it top Daimler AG's Mercedes-Benz in luxury auto deliveries for the second consecutive year."

    BMW 39% December gain overtakes Mercedes for U.S. crown (Detroit News)

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  • fintailfintail Posts: 33,776
    I am kind of surprised at that - the good 5er lease rates must have worked. I thought the F10 wasn't exactly setting things on fire sales-wise, so far.
  • steverstever Viva Las CrucesPosts: 40,781
    And guess who's running and gunning?

    "Six years ago, Audi trailed both of its German rivals in sales and cachet, and nowhere more so than in the U.S. Since then, it has nearly doubled its U.S. model lineup and prodded its American dealers to invest some $206 million in sleek and airy new showrooms over the past three years. Along the way, it has crafted an image as the upstart alternative to its more blue-blooded premium rivals, tapping into a luxury ethos that's favored the high, yet minimalist, design typical of Audis. "We have put a lot of work in recent years toward winning over the U.S.," said Audi Chief Executive Rupert Stadler."

    Audi Races for Luxury Crown (WSJ)

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  • fintailfintail Posts: 33,776
    Funny, Audi and MB are in the same dealer group in my town, and when I bought my car, the MB salesman was badmouthing Audi pretty hard. I like some of the styling, but I don't like the popup nav screens, and they seem to lease more expensive than the competition. Also the fact that a 4cyl FWD A6 exists here is kind of kooky.

    Still an amazing comeback though, 20 years ago they were effectively dead. The brand must be thanking its lucky stars for China.

    Ad also mentions that the acceleration debacle caused Lexus to lose prestige. Nah, that wasn't it.
  • hpmctorquehpmctorque Posts: 4,205
    I believe that China is now MB's biggest market, although Audi may have been helped more by China.

    The base engine in the 5er is also a turbo-4, but the fact that it's RWD may give it some additional luxury status. Would you feel differently about the 4 cylinder Audi if Quattro were standard?
  • fintailfintail Posts: 33,776
    Audi is far and away the strongest upmarket brand in China, helped by getting in early (and I don't recall any Chinese copycars of Audis, that might help). I want to say it outsells MB there by triple. The brand also appeals to what used to be the BMW demographic, and I won't elaborate any more on that (watch TopGear) :shades:

    I don't see the point of an Audi if it isn't Quattro - what sets the brand apart without it? The design is pretty, but there's still a lot of VW parts bin stuff in some models. Quattro needs to be standard across the range. But maybe that's just an enthusiast's opinion, as they seem to sell anyway.

    Oh, and speaking of China and Lexus both, I read the upcoming BYD S7 will be evolutionary from the S6, which is a shameless copycar clone of the 04-09 style RX. The S7 will be an 10+ style.
  • hpmctorquehpmctorque Posts: 4,205
    edited March 2013
    I agree with you on the Audi Quattro matter for myself; the two go together. Audi, though, has apparently decided that it doesn't want to lose sales to those who don't need or want the extra expense, complexity and weight of the Quattro system. You don't see many Subies in FL and southern GA, AL, LA and Puerto Rico.

    A couple of years ago I got into a conversation with an employee of what he claimed is the largest Audi dealer in FL. As an aside, he happened to be an Austrian who not only sounded like Schwarzenegger, but looked as though he could have been Arnold's younger brother. Among the things he told me is that FWD outsells Quattro by a large margin at his dealership. Most of the Audis they buy for inventory are FWD. Why? Many of the customers are retirees who mostly drive locally. They want a luxury brand, but don't want to pay for a feature they don't need. Any travel to the snowbelt is during the warm months. They choose Audis for their exterior styling and tasteful interiors. For some, Audi's small price advantage over BMW and MB is icing on the cake. The advantage that Quattro offers on wet roads is only appreciated by some aggressive drivers.

    I realize that the geographic area and demographic I'm talking about qualifies as a niche market, but it's a significant niche.
  • fintailfintail Posts: 33,776
    It might also be for cheaper prices - a base FWD A6 is surprisingly cheap (undercuts 5er and E by thousands), which makes better leases and sales, as so many of these things are leased. Good way to improve sales volumes. In my area (lots of rain, little snow), probably 95% of A6s I have seen on the lot are Quattro. But in drier areas, what you say is probably true and then some. A sale is a sale.
  • steverstever Viva Las CrucesPosts: 40,781
    "Daimler AG's Mercedes-Benz extended its lead over BMW AG in the U.S. luxury sales race, with a 5.8 percent gain in April.

    Sales for the Mercedes brand rose to 23,635 in April, led by gains for the C-Class sedan and M-Class sport-utility vehicle. The BMW brand posted a 10 percent increase in April to 23,225, the Munich-based company said Wednesday in a statement."

    Mercedes extends lead over BMW in U.S. with gain in April (Detroit News)

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  • anythngbutgmanythngbutgm Posts: 4,175
    Acura outsold Audi...
  • steverstever Viva Las CrucesPosts: 40,781
    "Akio Toyoda (Toyota CEO) wants more differentiation between Lexus and Toyota. Design is one area where we will do that. He also wants the cars to drive differently. They are tuned and evaluated to different standards."

    Williamsen aims to differentiate Lexus from Toyota, focus on design (Detroit Free Press)

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  • ohenryxohenryx Posts: 285
    They want a luxury brand, but don't want to pay for a feature they don't need.

    I'll go further than that. If I were in the market for an Audi, and the AWD was the same price as the FWD, I would choose the FWD. AWD adds weight and complexity, gives you yet another potential breaking point.

    I think a lot of the people who live up in the perpetually frozen northlands forget what it's like for those of us who don't deal with snow and ice 6 months of the year (or ever).

    By the way, isn't it about time for ya'll (southern slang, "You all"), for you to start tuning up your snow blowers? I myself am looking forward to the first cold front, and the chance to open up the house after several months of constant air conditioning.
  • steverstever Viva Las CrucesPosts: 40,781
    edited September 2013
    First frost predicted tonight. :-)

    (And it's spelled y'all.)

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  • fintailfintail Posts: 33,776
    A FWD Audi will also likely have considerably lower real-world resale value, so if one goes that route, they better get it cheap or keep it forever.

    Kind of like how a MB E-class can technically still be ordered without nav, but do it at your own peril.
  • steverstever Viva Las CrucesPosts: 40,781
    The CLA is looking like a huge hit - lots of car for the price of a high-end Honda. MB is even swearing that there will be plenty of ones available for the touted $29.9 base price.

    "Despite going on sale late in the year, the two new CLA models are central to propelling Mercedes-Benz to what the company is projecting will be a record sales year in the U.S. — as well as a likely luxury-car sales crown for 2013 as well. Through August, Mercedes-Benz sold 209,459 vehicles (including those from its smart and Sprinter brands), 11.2 percent better than for the first eight months of last year. The company's all-time sales record in the U.S. was set last year, when it sold 305,072 vehicles."

    Mercedes Dealers May Keep Lid on 2014 CLA 250 Prices as Brand Pushes to Record Sales Year

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  • steverstever Viva Las CrucesPosts: 40,781

    Mercedes is really on a roll. Lexus looks more and more like the also-ran.

    "Daimler AG Chief Executive Officer Dieter Zetsche said the automaker plans to lower sales incentives on Mercedes-Benz vehicles and raise prices on some models as demand outstrips supply.

    Zetsche has vowed to regain the top spot in luxury-car sales by the end of the decade after losing it to Bayerische Motoren Werke AG in 2005 and ceding second place to Audi AG in 2011."

    Mercedes to decrease sales incentives as demand outstrips supply (Detroit News)

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  • fintailfintail Posts: 33,776

    New C, S, and CLA/GLA won't require incentives, for sure. But at the same time, E and maybe ML will probably keep theirs.

  • hpmctorquehpmctorque Posts: 4,205

    It didn't happen in 2013, but according to an article in Automotive News...

    June 6, 2014 - 1:34 am ET

    DETROIT (Bloomberg) --" Lexus is back in contention for the wallets of U.S. luxury vehicle buyers, after trailing its German competitors for three years.

    Toyota Motor Corp.'s luxury marque outsold Daimler AG's Mercedes-Benz in May for the second time in five months and pulled within about 12,000 deliveries of market leader BMW AG so far this year.

    The gap may close further with Lexus scheduled to introduce the NX, the Lexus brand's first compact crossover, and the RC sports coupe to its lineup later this year."

  • steverstever Viva Las CrucesPosts: 40,781

    Very interesting - I figured they'd get stuck in 3rd place after MB and BMW.

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  • fintailfintail Posts: 33,776

    Must be the IS - LS can't be selling at all anymore, GS has had givewaway lease deals on local TV. RX is selling too no doubt.

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