Toyota Strategy

[Canopy]

I'm impressed. There's a picture in Wall Street Journal Online, but I haven't figured out how to get it in here. I'll keep trying. It does look like the BMW 7 Series, which, personally, I like.

October 24, 2005

EYES ON THE ROAD

By JOSEPH B. WHITE

DOW JONES REPRINT

Toyota's Master Plan

Its New Lexus Is Key to an Ambitious Effort

To Seize High Ground in Fuel-Efficiency Battle

October 24, 2005

TOKYO -- When Toyota launched its Lexus luxury brand in the U.S. 15 years ago, the car that put the brand on the map was the LS400, which looked like a slightly toned-down Mercedes E Class but was priced substantially below its German inspiration.

The derivative styling didn't stop a lot of American consumers from noticing the value proposition, and the Lexus flagship sedan's quality and quiet quickly earned it a legion of fans.

Until now, Lexus has appeared reluctant to mess with the success formula for the LS. It looks less like an exact copy of the Mercedes today, but words like "emotional," "aggressive," "sporty" or "edgy" still don't apply.

Toyota management would now officially like to change that. At last week's opening of the Tokyo Motor Show, the company unveiled a show vehicle called the Lexus Flagship Sedan concept car. (We'll just call it the "new LS.") It looks different from the old LS, but the differences aren't just hood-deep: The new LS is part of a not-very-secret plan to reshape the technological ground rules in the luxury-car market.

Toyota

The new Lexus Flagship Sedan concept car.

The production version of new LS may not look exactly like this when it arrives within a year or so. But it's fairly clear, especially from a side view, that Lexus designers have removed the Mercedes E Class from its (figurative) pedestal in the design studio, replacing it with a BMW 5 or 7 series sedan.

"We really wanted to have a departure from the past design of Lexus," says Kazuo Okamoto, the Toyota executive vice president who oversees research and development and design. That change, he says, started with the current-generation Lexus GS sedan, and has taken another step with the launch of the new Lexus IS, a car targeted directly at the BMW 3 series and the Infiniti G35.

"Rather than targeting or being conscious of BMW, we want people to feel the emotional joy of driving the car," he said.

This shift in styling and marketing values at Lexus will be accompanied by a push to expand the use of hybrid, gas-electric drive technology to set Lexus apart in the luxury field, Mr. Okamoto says.

Lexus already is selling a hybrid version of the RX 330 crossover sport utility wagon -- a vehicle that has endured mixed reviews for its surprisingly unsurprising real-world mileage. Next year, Lexus plans to launch a hybrid version of the Lexus GS, called the GS 450h. The GS 450h will have a new, rear-wheel-drive hybrid system mated to a 3.5-liter V-6. Toyota claims the GS450h will have the fuel economy of a 2.0-liter engine (about 30 miles per gallon) and the acceleration of a 4.5-liter V-8 (zero to 100 kilometers per hour in under six seconds).

But Mr. Okamoto says Lexus doesn't plan to stop there. A hybrid version of the LS is in the wings, and there's more beyond that.

"For Lexus, hybrid technology is extremely important," he says. "We want to change the concept of the vehicle. What we have been discussing among the engineers is that the feel of driving the car should be more like a jet liner."

Sometime around 2010, Mr. Okamoto says, Toyota plans to have the capability to build about 1 million hybrid vehicles a year -- still less than a quarter of Toyota's likely annual production. But Mr. Okamoto adds that "around that time, we would be able to reduce the cost, and have the cost of hybrid engines and gasoline engines comparable."

In other words, hybrid technology could become economically transparent to customers, making whether or not to buy a hybrid come down to personal preference. That could make Lexus a brand characterized by cars with scorching performance and aggressive looks that also run clean enough and efficiently enough to please a card-carrying Sierra Club member.

Of course, the proof of the pudding is in the eating. All this is still just a promise now. Meanwhile, luxury-car owners in Europe and a limited number in the U.S. already can already move to the sweet spot between power and fuel economy by purchasing cars such as the Mercedes E Class diesel. European diesels can outperform hybrids in a fuel-efficiency contest in highway driving -- the kind of driving most Americans do.

But European diesels currently need a lot of costly technology to run clean enough to pass muster in the U.S., a problem Toyota's hybrids don't have. European car makers are scrambling to change the clean-diesel cost equation before Toyota eliminates the hybrid premium.

In speeches and interviews around the Tokyo show, auto-industry executives agreed the car business is now heading into an all-out technological battle that recalls the industry's earliest days. The Japanese car makers, led by Toyota, want to establish gas-electric hybrids as the new standard for changing the oil-consumption equation. European car makers argue clean diesel engines -- and gasoline engines that act more like diesels -- can do the job more effectively. American car makers -- which have strong European ties -- are somewhere in the middle. Diesels are familiar, but hybrid technology is what clean-air regulators and leading-edge consumers in the U.S. market seem to want.

The U.S., the world's richest single car market, could see a collision between hybrid and diesel solutions to the energy challenge. (Another market where such a contest could play out is China.) American luxury-car buyers will be one of the most-sought-after prizes as auto makers try to define the future: Car makers use their top-of-the-line models to start rolling expensive new systems down the mass-production cost curve.

In this ultracompetitive period, it will be difficult to win while fighting junk-debt ratings and quarterly losses measured in billions. This, as much as anything, is what's causing panic in Detroit.

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[SW03ES]

I think the pic has already been posted here, look around and see if its the same one thats in the WSJ

[Canopy]

I think the pic has already been posted here, look around and see if its the same one thats in the WSJ

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Yes, CanadaCraig's got the pictures in his "2007 Lexus LS460" message. Thanks, Craig, nice work.

It is a good looking car, isn't it? Seems to be a cross between Lexus, BMW, and the older Jaguar.

[SW03ES]

I agree about Lexus and BMW, but Jaguar?

[Canopy]

I agree about Lexus and BMW, but Jaguar?

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Jag? Oh, yeah. Long, lean, stretching out. ready to pounce.

http://www.bbinsurance.com/ Like this one.

[SW03ES]

I just don't see it myself...

[Canopy]

CanadaCraig,

You or someone needs to put one of your photos in here so folks can see what we're talking about.

Work your magic!

[sha4000]

is this ok