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Comments
20-30% jump in economy? Do you get your numbers from crack-pot?
If Audi's gen A V8 engine had 20 combined, after 5-6 years it would become 24-26, and then in the next generation it would be 29-32? and so on!! How funny?
Next Gen LS should be priced head-to-head with 7 and A8, because
1. It has cutting edge technology, way ahead of 7 and A8, just go read the long list of gadgetry, its stunning! More safety technology than even S550, even pedestrian safety!
2. 5 yr old LS is more reliable than NEW 7 and A8
3. More power, 380 hp of raw passion
3A. Best in class claimed fuel economy.
4. Unsurpassed craftsmanship
5. Original design (despite the hollow cries of 7-series fanatics)
6. Lexus build quality
7. Lexus deserves just as much premium pricing as 7 and A8.
I've been waiting for the moment to correct you on many issues that you think that you're right on, which are far and few between.
I'm not here to discuss speculation, unlike you and a few others, just the raw facts. All of the data that I got came straight from Audi's Euro website. No lies or gimmicks.
Yes the XK that was recently introduced did increase substantially, but this is far from normal for Jag, with the new for '04 XJ8 increasing only 800 bucks vs. '03.
Furthermore, I think that this thread would be much better place of communication without people basically calling others untruthful.
And by all means, STICK TO THE SUBJECT as you'd have it.
Should or could? Imho, it could be priced at that level and still perhaps outsell the 7 (though offseting the factors you mentioned the 7 will still have the advantage of better...to some...driving dynamics, and despite the survey someone posted could in some people's eyes have stronger prestige/cachet).
That still doesn't prove that Lexus from a corporate standpoint should price it there. Why do you assume that you know better than Lexus what the profit-maximizing price strategy really is? Have you conducted your own surveys or focus groups? These companies do have focus group studies....I was even invited to what was described to me as a "luxury sedan" focus group, but unfortunately had a business conflict so didn't attend.
Maybe it is the Germans that are over-priced, not Lexus that is underpriced. Have you thought of that possibility? That if the Germans had lower production costs than they do in the real world, their profit-maximizing strategy might be to lower their selling prices, not maintain them?
Do you understand the concept of price elasticity of demand? And I'll ask again, do you have a better idea than Lexus of what it is for the LS? And of what the incremental margins are on the LS?
The old Jack Daniels bottle most be pretty low as this is one of the most far-fetched comments made here. Unbelieveable.
Anything to validate such a blasphemous statement? Probably not.
A LS430 with 40-50k miles on the clock couldn't be as reliable as a 7, A8, or an S, no matter who's driving it. This la-la land dreaming has to come to a complete stop at one point, NOW preferably. And furthermore, the whole point of people buying the LS is that they know that one can be had relatively cheaper than the competitors while offering the same options, if not more. Increasing pricing because " it looks good" or to have the "me-too" syndrome is just flat-out ridiculous. If Lexus was to follow this plan, they wouldn't be having the sales increases that they've been enjoying for quite sometime. Makes absolutely no business sense whatsoever. And thankfully that is why Toyota is extremely careful about who they place in decision-making positions.
Here's a suggestion: Let's just stick "discussing" cars and not turning into whose right and whose wrong.
Enlighten us on your thinking on this whole issue. Why exactly do you want to see Lexus raise prices to the levels you want. Is this psychologically tied to your purchase decision? Do you want to deplete your bank account faster? Do you think they are leaving money on the table or are passing up low hanging fruit? You've gone thru this never ending tirade that makes no sense to any of us and yet you've never explained any rationale.
From a business view I'll point out some more of your problems. Lexus has a build cost advantage over Audi and BMW to. So why move your price point to their level when you can undercut them and maintain a sound business value startegy that 99.99% of the business world would kill to have over their competition. Next - selling less cars at a higher premium is bad business. Why? - several reasons. First of all you'd have to retool your idle capacity to build something else. So there's a new cost to cover. Second - you'd have to market that something else - so now we have another cost on our hands. Third - what if there is nothing else - now we have a Balance Sheet writedown on our hands and that can be large and make investors think you don't know what the heck you're doing. If item three is true than we move to layoffs and now you have a whole new set of issues - both cost wise (severance) and politically given Japan is as bad as Europe with cutting personnel costs. You see - this is why you don't stray from a business strategy. If delivering equal or more to your customers for less is a strategy than it will be the same strategy 10-20 years from now. It is what it is - and what it is has been very successful - so accept it and move on. BTW I can list plenty of additional reasons but it's like beating a dead horse at this point
But I go back to the why issue. Why is it so important to you personally that the LS be pushed to your desired pricepoint when there is no sound reason to undertake the risk factors to do so.
The old Jack Daniels bottle most be pretty low as this is one of the most far-fetched comments made here. Unbelieveable.
Anything to validate such a blasphemous statement? Probably not.
A LS430 with 40-50k miles on the clock couldn't be as reliable as a 7, A8, or an S, no matter who's driving it. This la-la land dreaming has to come to a complete stop at one point, NOW
Your language was strong enough that I feel like jumping in on Steve's behalf. Check CR for the reliability ratings of the newest 7 or A8 they cover, versus a 5 year older LS. You might be surprised by the results.
You keep insisting on build cost advantage! I always agreed with you on build-cost advantage so why bring it up again?
Selling less cars at higher premium: You are automatically assuming that sales will fall to such a level that there will be idle capacity. This is just speculation.
Moreover, these days with flexible manufacturing, more models can be built on same line. besides Lexus/Toyota have mechanisms in place to increase or decrease capacity in tune with demand. Even BMW does the same. This is called flexible manufacturing, FYI.
Second: Why would you market that as something else, every one knows high quality and craftsmanship of LS, you are transforming it from "Value HELM" to "Premium HELM" where 7-series is.
Third: It makes no sense at all. With all respect!
I am not asking Lexus to stray, but I want them to evolve. Moreover, if your business strategy remains same for next 10-20 years you risk being left behind and ultimately expunged due to evolutionary surge.
I have no personal reason to push Lexus anywhere. Lexus can sell LS for 20K for all I care. I just feel that their business strategy should evolve in way so that they can command the same prices as 7 and A8. Why does Lexus deserve any less? And why is it important to you that Lexus should continue to undercut competitors. Why should it not make more profits by bringing its prices in line with 7 and A8?
Brain-storming this might give us some precious clues
I have great respect for your comments but sometimes you confound me with your stubborn ideas. Why dont you follow your own instincts and not get influenced by ideas.
I never said I am the god of everything and I have better idea than Lexus on LS and that Lexus should obey my command and pay homage to me.
But at the same time I firmly believe that LS should move from "Value HELM" to "premium HELM" in line with 7-series and A8. This is because this is the natural outcome of evolution in LS's life. It must not be stunted or besmirched. In a capitalistic society, LS should strive for increased profits just like Porsche. Look at porsche, it is also a HELM!
Have they not priced their products at a solid price premium. Should Lexus go the same way, it will capitalize even better on its build-cost advantage.
Besides, it will STILL BE A GREAT VALUE COMPARED TO S550. 10,000$ advantage, can't you see what I am saying?
Anything to validate such a blasphemous statement? Probably not.
A LS430 with 40-50k miles on the clock couldn't be as reliable as a 7, A8, or an S, no matter who's driving it.
A twenty year old Porsche 911 can still beat the crap out of a Corolla in terms of performance, and yeah, a five year old LS can beat the crap out a new A8 in terms of reliabilty. An A8 will have more problems in the first year than the entire life of an LS.
I agree Lexus can move up the price ladder...they have been doing so for the last 17 years...but I don't expect them to necessarily move to parity with the 7 in 4-5 months. Though it could happen that soon, it could alternatively take years more. And I'm not about to second-guess Lexus management if they decide not to do it in 4-5 months. There can be sound business reasons for pricing lower than the competition, even for luxury goods.
My point still remains: In no way will a 5yr old car be as reliable as one fresh off the assembly line. I don't care whose side you're on or what report you're reading, it ain't gone happen.
BTW, it's very interesting to note that the S-Class was omitted in this whole debacle. Why would the "most unreliable" (what most of you would have it on this thread) car be omitted from the discussion? Very interesting.
But after careful consideration, steve, I now understand you.
Dear Lexus,
My name is Steve Kilburn. I know that you are not charging enough money for your LS line of vehicles. I want to pay more and I want everyone else that buys one to pay more. It bothers me that they might be considered "VALUE"-priced vehicles in the HELM category, because I want them to be considered "PREMIUM"-priced vehicles in that category. I insist that you price them as they SHOULD be, in line with the 7 series BMW and the A8 Audi. You must do this NOW while the opportunity is there. Do not STUNT the LS. Go for BIGGER PROFITS and do it NOW, otherwise you are selling your vehicles CUT-RATE.
If you believe in CAPITALISM you will raise your prices to the level I have commanded you and you will do it NOW. Make sure you do not undercut your competition. Any changes that these price increases might make to the demand for your vehicles is of no concern because you can always use your FLEXIBLE manufacturing techniques. And remember to always consult first with BMW and Audi so that you set your prices in line with theirs because I have personally selected them to be the barometer for your price structure from now on. That's ALL I'm saying. That's all I've been saying all along.
Oh . . . by the way . . . you really SHOULD stop building those HIPPO Lexus SUV's that are sucking all the earth's resources away and are nothing but rolling TERRORISTS. Maybe their drivers should live in a land fill for a week.
My credentials are impressive as I work for a drug company and NEVER take any of the products myself, but I'd swear that there is someone smoking crack on the forum, and I think that it may be the same person that accused me of stealing my own stuff.
Also, I want you to find out who the CLEVER person was that broke into my house and implanted that transmitter in my brain that makes me think and say things that I can not control.
Sincerely your best consultant you ever had but never asked for,
Steve Kilburn
You see, steve, I told you I understand you now.
TagMan
Actually, a 1998 Lexus LS400 is more reliable than a brand new A8, 7 or last gen S class. (Perhaps the S was not mentioned because theres no real info yet on a car a few months old? I dont think there's anything "interesting" behind that.) There are plenty of things the European HELMS can beat the LS on, but a "'ol reliable" fight is something they simply cannot win. Lexus owns that one.
Thank you very much for your kind advice. However, as you may have noted, our parent company Toyta recorded net profits of 3.4 Bn USD in the latest quarter (up 34% year on year), their balance sheet has 30 Bn USD of free cash (net of liabilities) - even as their investment in new capacity and technology is highest ever (actually for the full year likely to be double of 2005, at 12 Bn USD - They are even building their own production line for semiconductor chips to be used in next generation of Toyota and Lexus cars) - And the share price is up 74% in the last 12 months.
In such circumstances, we believe that increasing prices is not a high priority for the company - In fact, we would like to bring our hybrid technology costs down to a level where we can offer it without any mark up, and boost performance 20% for all our models. That would liven up discussions on this forum, don't you think so?
Regards
Lexus
A Lexus dealer would probably be willing to sell you a LS460 at the price you desire, if you state that you are determined to pay the price of a new 750 or A8, and not a penny less!
If Lexus raised the price on the LS comparable to the S Class, don't you think Lexus would lose quite a significant amount of sales to Mercedes?
If I was spending this kind of cash and MB and Lexus were comparably priced, I would take the MB every time. I'm sure I'm far from alone in my thinking.
There is a point at which brand cache takes over.
Perhaps in 10 years or so, but surely not now.
I had a 1998 LS400 that I bought on the notion that thing runs forever. I know that the Lexus' are by far the most reliable cars in it's segment, but my experiences with my '98 proved otherwise. Much unlike my beloved '92 that is still running for the owner I sold it to 10 years ago. Let's take a look at what happen to my '98:
Transmission failure at only 29,000 miles(4200 repair)
PCM reflashed several times throughout ownership
Both control arms needed repair(way out of the norm)
Total electronic failure at 38,500 miles, and that was the last straw.
In sharp contrast, the '01 S500 that I got rid of it for NEVER went to service for nothing more than usual standard MB maintanence and recall repair. This is the model that was the lemon of Germany.
And now lets look at my latest offering, the A8 W-12. Not so much as a whisper and this car is far from the assembly line w/ 17000 miles on the clock. And we're still talking German.
So Lexus is not immune to deficiency, or ineffeciency for that matter. I know a lot of Lexus' cases are isolated and don't occur often, but read the Lexus threads on this very forum, especially the cars that AREN'T FIVE YEARS OLD YET(ie: current LS life-cycle), and you'll be able to seperate life from fairy tale. We have to remember that these cars are all mechanical, and yes some give-in way before others, but they all have problems. Show me a completely trouble-free car, and I'll dig my own grave.
The earliest I've ever gotten my computer printout of weekend chores.
Very funny post!!!
I dunno. Between you and Tagman, I have never laughed so loudly this early on a Saturday morning!
What the heck does this mean, besides apparently being some sort of snide insult? Like much of what you post, it is unintelligible.
You are speculating on "Lexus would have" and "Lexus could have"!
Was your point that it was mere speculation on my part that Lexus had performed any price vs. demand studies before coming up with their entire business strategy? You can't possibly be that naive, and then suggest that I am the one who needs to "learn management". Clearly, it is you who needs to study microeconomics and profit maximization.
At this point in my life, I am sure I could still learn much from Jack Welch, but I have yet to see any indication I have anything to learn from you. With apologies to Lloyd Bentsen, "You are no Jack Welch."
Not surprisingly, he would very much like to meet you.
He ordered special Kona coffee just for you.
High rollers always get the VIP treatment!
In addition, for special customers so willing to pay a premium fee, they will tear out that Mark Levinson® Audio System and replace it with a Bose Audio system.
I'll be right down. Please hold it for me!
I hope the others will roll back and read that letter also. All in good fun, of course.
TagMan
I'll be right down. Please hold it for me!
Throw in the sign that says I paid as much as the price of a 750Li, please. Better yet, I'll pay for the sign, too.
In that case, we will put a stop on the Kona and get you the Jamaica Blue Mountain beans reserved for our very best customers.
Perhaps a GS for the wife while you're here? With a little creativity, you might even fit 2 plastic grocery bags in the trunk.
If you come in today, I may be able to convince my manager to let you have the GS for $14k over list.
Yes sir, Mr. Steve! It will definitely be a "May To Remember!"
ROFLOL
Well this is exactly what I was saying in that post. I don't think the time or configuration is right for the S450 right now. If Mercedes does adopt their new petrol direct injection system to their new V8s that would be the time to introduce a S450 with at least 360hp. I don't see a S350 even with direct-injection here anytime soon. They have the S65 AMG, S63 AMG and then possibly a S320 CDI which will be, along with that S450, enough S-Class variants to enable them to keep the car selling strongly for years to come.
I don't think you've gone too far with this because you're saying the exact same thing I was suggesting about adding a S450 right, it would do more harm than good, IMO.
M
I don't think you've gone too far with this because you're saying the exact same thing I was suggesting about adding a S450 right, it would do more harm than good, IMO.
So you are saying a single S550 model is enough to hold off the LS460, LS460L, LS600hL, 750i, 750iL, A8, A8L, XJR ?? Methinks not. MB needs another one to supplement the S550 pretty quick. By next spring, the LS600hL arrives here, and MB suddenly has 3 LS series sedans to battle against using one S550, or maybe a possible S600. But MB is known to have far more variants than Lexus, so it'd be strange if the role is reversed, don't you think ? And I don't count the very low volume S63/S65 here.
Well, while we do mostly agree . . . maybe not on this point. I am suggesting an alternative that is unexpected, even by you. I am suggesting an S350. Certainly, the 320 CDI would be the more obvious expectation, but if the 350 CGI is truly slated for the CLS, as I believe it is, then I find it easier to think that it (the 350 CGI) could worm its way into the S-Class as well, perhaps as the S350 CGI. It would be less of a clash with the S550, and concurrently it would tap into a growing market and offer an additional competing vehicle.
I place high credibility with your views, as you are a walking MB database with a direct google connection as well, IMO, but on this one (S350 CGI) I admit that I am thinking a little further outside the box. Maybe too far, but it makes sense to me, at least for now.
TagMan
No, does it look like I'm saying that? I clearly stated that I don't think it would be the right thing for them to introduce a S450 RIGHT NOW for the reasons Tagman and I mentioned before. Mercedes doesn't have to "hold off" the LS nor could they as far as sales go because we all know the LS is going to be cheaper. You missed the point entirely it seems.
MB needs another one to supplement the S550 pretty quick. By next spring, the LS600hL arrives here, and MB suddenly has 3 LS series sedans to battle against using one S550, or maybe a possible S600.
Nonsense. They don't need anything "pretty quick" because as it stands now the S550 is selling a rate not previously seen for the S-Class. The point is as time goes on and the competition increases they'll start to add more variants which is no different that what MB and BMW for that matter have done for years and years.
And I don't count the very low volume S63/S65 here.
You don't have to as far as your sales theories go, I mentioned them because these are variants that MB will build - point being they'll have enough already without adding a S350 CGI like Tagman hinted at.
This whole "who will be tops in sales" thing is really irrelevant until either Lexus prices like MB (which I'm not suggesting they do) or until MB drops prices to compete directly with Lexus. We all know the Lexus will be thousands cheaper and common sense says it should sell better especially that SWB LS460 which won't even be close to a starting price of the current S550. If there were an S450 coming for this fall it would have been at the NY show like all the other MY2007 updates were. So as it stands the price of entry to the "S-Class" will be around 87K (for now at least), likely 20K or more above the price of where the LS460 will base at.
M
However MBUSA did offer a S350 version of the W220 in its closing months so maybe for that 2012 model year they'll offer a S350 CGI or whatever its called by then..lol!
We'll see because at this point I think the S550's demand may have the re-thinking everything as LJ said earlier.
So lets see for the 2007 model year we have the S550, S600 and S65 AMG. For the 2008 model year a S63 AMG is a given from there it will be anyone's guess. There could be a S320 CDI or Bluetec which would be 50-state certified and would really be a hot item IMO, then there could be that S450 and even a S350 CGI, we'll just have see.
BTW, I never use Google concerning MB, just their past doings and Germancarfans, MBWorld and some other sources.
M
But humor aside: The reason I am strongly advocating head-to head pricing with A8 and 7 is because now is the time. This is the year of transition and new model change.
If prices on LS 460 make a quantum leap, customers wont mind, but once you have introduced the model, its very difficult to do that. In between model changes you can only do incremental additions.
LS is currently 22% cheaper than 750. I suggest it should make a quantum leap of 12% this fall and then keep increasing prices in increments in following years to bring in line with 750i and 750Li to make up for the remaining 10%.
I am sure when Lexus is educated properly along these lines they will be convinced and success will kiss their feet.
My argument is not centered on profits, but a paradigm shift in essence of LS. The transition from "value HELM" to "premium HELM" is about a paradigm shift, a transformation into a new era, and this is the year to do it.
New LS 460 will be able to justify quantum leap in price increases in line with A8 and 7.
In fact lexus must not sleep on its success, but watch out for complacence and overconfidence. Just because profits and shares are sky high today does not mean we should go to bed.
"Comparable to S": I never said that. You should read my post MORE CAREFULLY. I said bring price in line with A8 and 750i, in 70-72K range. Thereby still having more than 10,000$ price advantage over S550.
i suggest when the car comes out, spend an hour or so at the dealer's adjusting the seat in the showroom vehicle. You may change your mind.
I spent a lot of time adjusting my 545's comfort seat until I got it right.
I'm sure there is a combination of settings in the Lexus which would work for you given the time to experiment and find it.
I am not Jack Welch and you are not stupid. Lets move on to HELMs.
Regarding focus groups and research, yes it can provide some information, but we are talking about a new era and the next rung of HELM leadership. Times have changed and the principles of "value" are good for Toyota, but LS should move in a different zone.
I haven't even seen let alone sat in the LS460, but in the current LS430, if the top cushion of the seat is set forward, the car can seem small for a big guy without any indication of the reason why. The forward positioning of seat cushion is not obvious and could have been done by a previous occupant who was just playing with the seat controls.
You might want to check this out very carefully before you make a decision on just that assumption. I saw the same thing happen to my 6'5" cousin (who owns an Avalon); he got in my LS430, moved the whole seat all the way back, and said he still couldn't fit in it. Then I slid back the seat cushion, and lo and behold he was fine.
Of course, the BMW 750 is a nice car, too. And there will be the option of the LS460L, which might fit you better.
We should all be so properly educated as the brilliant folks creating and running the dynamic Lexus business model in real time-one of the greatest success stories in the history of world business and it just keeps getting better.
You have to spend the time in the showroom to experiment with the seat.
Funny, when I test drove a GS 10 months ago, the seat was so poorly adjusted, when I pressed the start button, the steering wheel began moving up from a very low position and almost converted me from a baritone to a soprano, if you catch my drift. Scary!!
I'm glad you enjoyed it, steve.
I am sure when Lexus is educated properly along these lines they will be convinced and success will kiss their feet.
Uh oh . . . there you go again. "When Lexus is properly educated!!!???" From YOU?? "Success will kiss their feet!!!???" Sure, steve, Lexus is hardly successful NOW. Maybe if YOU educate them, they will become successful. BTW, you are not a psychopath are you? Or delusional?
TagMan
I should have used "more successful" instead of "success" because you and I know Lexus is very successful already.
It actually comes around as shocking to me how some guys "automatically assume" and EXPECT LS to provide with value largesse but dont NATURALLY expect the same from germans. How funny? All kinds of shaky arguments like build-cost advantage, new brand, soft ride etc etc are put forth.
I read a comment on this thread recently which goes, "If Lexus charges same as Audi and BMW, why should I go with LS?" as if LS is some kind of step-child which always deserves a back-seat. Hmm!! May be I SHOULD Write a letter to Lexus after all.