New Ls Meant To Polarize

[pj8708]

Very interesting stuff. I can't wait to see a full layout of the new design.

Go to the link below for the full text and photo.

http://lexusenthusiast.com/2014/11/11/next-generation-lexus-ls-emotional-design/

[midwesterner]

Hmmm! Interesting, but remains to be seen. As I noted in a recent post, the current car is an elegant machine. It does not have the visual impact of an M-B S550 or an A7 / A8. Like many Japanese designs, the focus seems to often be on not alienating rather than making a statement. Something to do with Eastern ideas of harmony, perhaps.

The bigger issue is technological, I think, and the car needs to come closer to its European peers in performance. The current LS I drove needed a little sharper steering and taughter suspension, perhaps, and brakes with more bite, like those on my '13 GS350. Driving feel is more like my wife's '09 RX350. The f-sport version solves that problem, but I don't care for many of the f-sport features (boy-racer looks?). Couldn't we have a touring version with the suspension and brakes but not the trim package, and the sport seats and largers tires / wheels as optional? And if I'm going to spend f-sport money, I may be more inclined to look at German engineering -- which is where my heart has generally been in the past.

Having said that, at age 70 and bearing down on 71, I put a little more premium on comfort and reliability nowadays, and by 2016 might be ready for an LS. It certainly meets the test for quality, reliability, and elegance. Just as long as the Lexus stylists don't polarize me out of it.

[midwesterner]

On re-reading the article in the link, I am again struck by the curious insistence from Mr. Uyttenhover that Lexus is not seeking volume. Alain Uyttenhoven, by is name and assigment for Lexus, must surely be European. If so, he would be keenly aware of his competitor strengths. He may mean that Lexus will not lower price or de-feature cars to get volume, but to say the company has no interest in gaining share of market seems disingenuous.

If, in fact, Lexus is selling about 500K cars annually while Audi, BMW, and M-B are sitting on about 1.5M sales each, I would think increased market share would be a significant objective. During my corporate career, I didn't know anyone in marketing or manufacturing who didn't think very competitively in terms of sales volume. Given the cost benefits that come with volume increases, I have trouble believing Lexus management is happy sitting on one-third the volume of each of its three main European competitors. A quote from Shakespeare comes to mind: "He doth protest too much, methinks", or something to that effect. So yes, let's think a redesigned LS is very much aimed at attracting new customers.

[LEX-SV]

Good and about time. An attractive version of Panamera could be a big hit in this lucrative class.

[midwesterner]

Some more on Lexus strategy: Whether or not the next LS is more Panamera-like remains to be seen, but a story in today's WSJ may shed a little light. The story, in the Marketplace section, deals with Volvo's attempt to make a U.S. comeback, and notes the positions of the luxury-sport competitors. Data shows Lexus at #3 position behind M-B and BMW respectively, with 335K annual sales for M-B, 309K for BMW, and 275 K for Lexus. Audi is down the list at 159K, followed by Infiniti and Volvo. This is a substantially better position than the sales referenced in the links to the Uyttenhover interview, which I think were global numbers.

But Lexus has fewer dealers -- 234 compared to 361 for M-B and 338 for BMW. Only Infinity has fewer. The consequence is more sales per dealer -- 1175 for Lexus vs 929 for M-B and 915 for BMW. That generally means more profitable dealerships, and lowers the cost of dealer administration. Consolidation among construction equipment dealers a few years ago resulted in fewer but stronger dealer organizations that benefited both the customer and the manufacturer.

So maybe Uyttenhover's argument that Lexus is not chasing volume makes more sense and gives some insight to Lexus strategy. Strong dealers and an improving product line benefit those of us who buy the cars, so good on 'em.

Also noted today on a CNN or MSN news piece a listing (from Forbes Magazine?) of cars not to buy. The BMW 745 was apparently excoriated by Consumer Reports as overloaded with technology and a poor driver. That's surely a jolt for BMW, and contrasts sharply with the ratings for the LS. And while I was at the dealership yesterday for my 2-yr / 20K service, I got a good look at the new RC coupe. This is an impressively styled and executed vehicle, and likely another Lexus success in the making. Could snitch some sales from both M-B and BMW coupes.

All this strikes me as good for Lexus demand, sales, resale value -- and us.

[LEX-SV]

In this class of super lux big sedans, the S-class is doing best. And the ugly Panamera has surprised many with its sales success. If Lexus sets its sights on those 2 and plans on "exceeding", this could get real interesting.

The coupe market is a bit fickle, but RC could be a hit, I'm considering one later. Lexus needs to breath on the 3.5L V6 a bit (for an extra 10% more power or so), because 306 horsepower today doesn't have the same market impact as 306 horsepower in model year 2006.

4 series and A5 are the current benchmarks for this class of coupe, C-class coupe is outdated and due for redesign on new platform.

[midwesterner]

Agree!

[pj8708]

Having spent my career in marketing multimillion dollar equipment, this age old dance of pricing for volume, versus large markups for a high end, custom fit product is always a "crap shoot"resulting in lower market share, but better profit opportunities.

It's doubtful that a company such as Rolex worries about being the worlds largest watch company, but doing so with low ball pricing would degrade the aura that comes with the name Rolex. Lexus move to put a floor on it's products MSRP will help maintain their luxury status. When Mercedes began offering a product for around $29,000 my perception of the Mercedes halo dropped substantially. If I have a choice to buy a MB for $80,000 or one for $29,000, my reaction is that the company is desperate and as a possible buyer, why are MB's rated by over a million people surveyed,as being one of the worst badges for reliability.

Market success demands consistent perception of value. The decision Lexus made this year in bringing out a product they knew would be polarizing, will help them present a true alternate of choice in a line-up of contemporary, reliable, and option rich true luxury cars.

Paul

[LEX-SV]

Like Mercedes now (fwd CLA), Lexus has always sold well into lower end with the fwd ES. US market offerings by Mercedes are different that ROW, now those differences are narrowing.

The Mercedes badge is still the envy of nearly every major automaker as they continue a tight sales race with BMW, a first class challenge for an auto business to say the least. Despite the ups and lately the downs of reliability at Mercedes (CLA and S-class per CR have dragged down overall brand reliability lately), the perception of value in the lux car business is quite good.

For Lexus with a better LS to take a serious chunk of the new S-class business would be a great achievement. The 7 series BMW today will get left for dead, not desirable in the lucrative import-rich areas of California for example.

I am looking forward to seeing a exciting LS. When I see how Mercedes shook up the lux car business with the CLS, it shows being bold can be lucrative.

[midwesterner]

Accurate summation by St. Americans tend to see M-B as occupying a lofty and expensive niche, but if you spend enough time in Europe, M-B's ubiquitous presence in everything from taxicabs to family cars gives a different picture. During the time I lived in the U.K., M-B launched the A-class. It's a fwd car that competes in the compact -- by European standards -- size class, and revolutionized the idea of small, luxury vehicles. Crowded streets and no parking in Geneva; solution: A-class. Cab ranks at Munich airport; C-class succeeds the old 200 cars. Chauffered service to your hotel; look for the driver with the dark blue S-class. 100 mph-plus on the autobahn; E-class diesel coming up in your mirror.

I think M-B has only done in the States what was already established in Europe, and that Lexus is following suit. The game is market share.

Sacrificing price for volume is, I agree, a potentially losing game. But commanding price and volume; different story. Rolex is a good example. BMW pretty much owned the rights to that gig for years, and may still. Bob Lutz says it costs about the same to manufacture a Chevy Malibu as a BMW 3-series, if I remember correctly from his book.

Lexus has targeted a slightly different audience, as I assess it, and has focused on reliability -- which is a vulnerability for the Europeans. I think we'll need to stay tuned for a while to see who wins, or if the race becomes a draw.

[VBdenny]

Stephen, may I say that I very much enjoyed your perspective on Lexus vs others. Not too bad when you can learn new things. I have noticed that while I see bundles of BMWs and MBs, I rarely if ever see another IS. Nothing wrong with that.

Denny

[midwesterner]

Thanks for the compliment. And I agree about the relative exclusivity of the Lexus; nice not to be just one of the herd -- however elegant the herd might be. I really like the new IS, especially since it is more my size preference, and I will give that car a hard look as I consider my end-of-lease options.

Lexus had done an outstanding job of catching up to the Europeans in performance and handling, matching or exceeding those benchmarks in some models. At the same time, Lexus has set a benchmark for reliability that I think the Europeans have yet to approach, at least across all model lines, and has set a dealership standard that only the best of the European dealers offer. Finally, and perhaps most interesting to me, Lexus management has calculated its customers a little differently than the Europeans, sacrificing a bit of the performance edge for luxury and reliability. That seems to be paying off, and it will be interesting to see how that philosophy plays out over time, especially if Lexus continues to raise the bar on handling and performance. I think my GS350 is pretty close to the equal of a standard awd A6, 530, or E-class.

[VBdenny]

My first Lexus was a 1990 LS400. Perhaps my favorite car ever. From what I remember, when Toyota first set out to develop a luxury line, peopl were very skeptical. The initial LS400 was designed using the exterior styling from Mercedes, engine, drive and performance from BMW, and interior styling from Jaguar. Thinking back to what I heard, toyota decided to sell the first line at somewhat of a loss.

The 4 cam, 32 valve V-8 in the LS was (and still is) an amazing engine. Sold the car to a friend and it is still perfect.

The ES330 I have was never as nice a car for handling, ride or performance but still a very nice car. The new IS is a pretty sweet car which handles much better than any car I have ever owned with the possible exception of the mazda Miata I had. I did not opt for the 350 mainly because my right foot gets twitchy and that can cause blue lights.

[midwesterner]

You are correct, I believe, about the original LS, and many people mistook the car for an M-B when it showed up on the streets. In particular, the Japanese focused on detail -- as only the Japanese can do -- and delivered an automobile that changed the game. Skeptical automotive journalists soon gave the car points for refinement and reliability, even if it didn't offer BMW handling. And the Lexus business model forced German manufacturers to re-think quality and reliability targets, along with product support.

Contrary to the perception of many American enthusiasts, not every Germany burgher drives an M3 full tilt all day every day; ditto M-B AMG models and Audi S-designations. Most of them, if they own German cars at all, drive standard models -- many with smaller engines than offered here (price of gas). All the Germans have gone upscale on luxury, trading off some of the performance edge except for certain options. I think that trend matches both customer demand and corporate objectives for sales volume.

I was reminded of the reliability factor yesterday driving back from Thanksgiving in Milwaukee, when I saw a fairly new M-B GLK SUV being hauled on a tow truck. The car hadn't been wrecked so it must have been an electronic or mechanical failure. I'll bet that owner was an unhappy camper.

So overall, Lexus acquits itself pretty well. The automotive journalists seem to find the IS is now pretty much a match for the 3-series, and same for the GS vs 5-series. Same with Audi A4 and A6 comparisons. I noted that several writers rated the GS better to drive than an M-B E-class. A fellow here in town owns a fairly new Bentley, but also purchased an LS460 from the same dealer salesman I work with. According to my dealer guy, the Bentley owner regards the LS as the superior vehicle. Depending on model and configuration, Edmunds pretty much rates GS and IS as equal to the Europeans.

Customers in the end will vote with their dollars, and it will be interesting to see to what extent we have convergence between European performance standards and Japanese reliability.

[pj8708]

Based upon your points regarding European makers cars to seem to be ubiquitous, keep in mind that for the period ending 12/31/13, Lexus was the number one seller for then 3 years in a row. Not so this year.

Markets are fluid, and with each new roll out from the manufacturer comes predictable shifts. Shifts like we've been talking about, but also the need and or desire of the country to move away from current, limited fossil fuel technology to new technologies.

I see this as having more pressure on market forces than the few seconds less in going from 0 - 60mph. It may come to pass, and has already been felt, that customers will still demand true luxury, but also a carry over of Lexus, first in the nation reliability in thier technology changes.

I wish we could get our new members involved with chats like this one. Any ideas?

Paul

[LEX-SV]

I see the challenges for Lexus with the LS as a challenge for Lexus and its entire lineup. Maybe to get new members involved some form of this discussion should be in General Chat section.

Today (post recession) Lexus in the #3 position in North America shows some ground lost and much work to be done.

I think the leadership at Lexus has a pretty good understanding today as to what it takes (certainly a better understanding than prior years). Let's see how the actual execution plays out...

[midwesterner]

Ubiquitous in Europe, Paul, not here. And performance doesn't mean 0-60, especially in Europe. Both the Brits and the Continentals probably see Yanks as obsessed with acceleration. They put a premium on handling and braking, high-speed cruising, and fuel consumption.

My point was that when we think of M-B going down-market to gain share, as I think you suggested in a previous post , we need to consider what M-B looks like in the rest of the world. Depending on where you are, M-B products cover everything from the equivalent of Chevrolet and Buick buyers in the U.S. to premium sports cars, the Rolls-Royce and Bentley crowd, people carriers and delivery trucks. Going down to the $30K level in the U.S. with the CLA is not a deviation from M-B global strategy

Re: healthy debate, I don't know. As you may recall, that was a point of one of my earlier posts. I've tried to prompt a little discussion, and gratifyingly, we got some on this string.

[LEX-SV]

The good news we have some discussion from those outside of LS owners. Well done all!

Yes Mercedes offerings in Europe are very diverse. And Lexus execs in the U.S. talking about setting some arbitrary low price point for their entry level cars is empty, especially considering how Lexus was early to market with reasonably priced common Camry-derived fwd products for example. And everybody in the auto industry knows of the extremely successful MB fwd CLA in nearly every major market in world including US, a home run with sales greatly exceeding forecasts.

[LEX-SV]

Example: Plenty of American (and European) buyers view this cheapish Mercedes as desirable and are buying thousands every month.

CLA250 w/sport package and pano roof, a very popular config. Click on pic to blow it up.

[VBdenny]

I acquired my first Lexus in 2001 from a friend of mine who bought it new in 1989. Being the first Toyota product for me, I had no Idea exactly what to expect. Let me just say that my expectations were so far exceeded, I never considered the others. Getting new members falls back on current members. I have recommended LOC to many people I have met that own a Lexus vehicle.

Regarding the discussion. Some of us continuously seek interesting content. Whenever I can learn something in a thread, it gives me a warm fuzzy feeling.

[VBdenny]

And yeah, that little Benz has a cute logo on the front

[LEX-SV]

And yeah, that little Benz has a cute logo on the front

No kiddin...

And they offer a $500 dealer installed accessory to have the logo light up! Blingtastic!

[VBdenny]

Didn't know that, ha. What next.

[pj8708]

Your suggestions about placement of this topic is a good idea.

For a trial run, I'm going to post these threads in the General Chat forum. I'll leave a topic header here, and members will be able to join from either forum.

This conversation reminds me (in a good way) about a conversation a few years ago. The topic was, what makes a car a luxury car?

as well as the natural off-shoots which were, When does a consumer car market become a luxury market?...an etc.

Paul

[VBdenny]

Sounds like a great move Paul

Thanks for the attention to details.