Wsj Story Details Lexus Sales Plan

[midwesterner]

A story in today's (Sat Dec 6) WSJ details Lexus sales objectives, and puts some recent Lexus exec quotes in perspective. It appears on p.B4.

In short, the story focuses on the NX small SUV (based, incidentally, on the Toyota RAV4) and it's role in recovering the Lexus luxury car sales position in the last decade. Apparently the erosion comes to a large extent from lack of vehicles in the small SUV category. Recently statements about European pricing and not dropping below the $30K car figure are apparently related to the Audi A3.

A3-sized cars in Europe are a big part of the market, and unlike the U.S., the notion of luxury is not necessarily related to size. Roads are often narrow, parking is limited in cities, and fuel cost is a critical factor. Lots of small - medium cars with engines below 2L, or diesel-powered. The introduction of those cars in the States, with U.S. spec'd engines, is an introduction of the European idea. I wouldn't say it constitutes a price war, as alleged recently, but it does take the notion of "luxury" down a few $$. Look at the U.S. answer in the Ford Focus or Fusion, for example, or in the Chevy Cruze and Malibu, or the Dodge what's-it.

In any case, Lexus hopes to sell 40K NXs in the next year, nearly matching the BMW / M-B small SUV sales (100K units this year). Currency exchange rates will play a role, and the strengthening dollar may make luxury imports look more attractive. I haven't looked at impact of exchange rates on German vs Japanese cars, but one may benefit more than the other, all other factors (e.g. production cost) being more or less equal (probably are not).

Lexus enthusiasts will find the article worth reading, and it is interesting to note that only about 26K units account for the spread between the top (BMW) position and 3rd-place Lexus in this country. Would be interesting to see a break-out of sales by model, LS40 vs 7-series and S550; GS vs 5-series and E-class, for example. That might tell a different story about the Lexus competitive position. In another interesting statistic, both BMW and M-B sales in the U.S. are up, but Lexus sales are up by 4% against BMW and double M-B; so gaining sales faster than the competition.

Is a return to the market-leader glory years in the offing? Stay tuned and watch the NX launch.

[pj8708]

A story in today's (Sat Dec 6) WSJ details Lexus sales objectives, and puts some recent Lexus exec quotes in perspective. It appears on p.B4.

In short, the story focuses on the NX small SUV (based, incidentally, on the Toyota RAV4) and it's role in recovering the Lexus luxury car sales position in the last decade. Apparently the erosion comes to a large extent from lack of vehicles in the small SUV category. Recently statements about European pricing and not dropping below the $30K car figure are apparently related to the Audi A3.

A3-sized cars in Europe are a big part of the market, and unlike the U.S., the notion of luxury is not necessarily related to size. Roads are often narrow, parking is limited in cities, and fuel cost is a critical factor. Lots of small - medium cars with engines below 2L, or diesel-powered. The introduction of those cars in the States, with U.S. spec'd engines, is an introduction of the European idea. I wouldn't say it constitutes a price war, as alleged recently, but it does take the notion of "luxury" down a few $$. Look at the U.S. answer in the Ford Focus or Fusion, for example, or in the Chevy Cruze and Malibu, or the Dodge what's-it.

In any case, Lexus hopes to sell 40K NXs in the next year, nearly matching the BMW / M-B small SUV sales (100K units this year). Currency exchange rates will play a role, and the strengthening dollar may make luxury imports look more attractive. I haven't looked at impact of exchange rates on German vs Japanese cars, but one may benefit more than the other, all other factors (e.g. production cost) being more or less equal (probably are not).

Lexus enthusiasts will find the article worth reading, and it is interesting to note that only about 26K units account for the spread between the top (BMW) position and 3rd-place Lexus in this country. Would be interesting to see a break-out of sales by model, LS40 vs 7-series and S550; GS vs 5-series and E-class, for example. That might tell a different story about the Lexus competitive position. In another interesting statistic, both BMW and M-B sales in the U.S. are up, but Lexus sales are up by 4% against BMW and double M-B; so gaining sales faster than the competition.

Is a return to the market-leader glory years in the offing? Stay tuned and watch the NX launch.

Thanks for your views.

I'm posting your most recent post regarding the Wall Street Journal's article covering the same interview with the Lexus President.

[pj8708]

Here are the November sales numbers for each car model. This should provide current, accurate data for comparing the current popularity of what models.

When reading these numbers, keep in mind that Lexus sees their market nemesis as Mercedes, Audi, and BMW. It's important to remember that the US is just one market for Toyota.

http://lexusenthusiast.com/2014/12/02/lexus-november-2014-sales-report/

[LEX-SV]

And for the Lexus division of Toyota, US is the major market by far.

As I mentioned earlier, I expect big things for NX sales in Lexus's predominate US market. And NX styling is better than RX styling too.

[midwesterner]

The WSJ article quoted N.A. Lexus gen'l mgr Jeff Bracken. Not sure I ever saw the complete interview with the N.A. president, but I didn't think it was the same interview. I had also seen the sales by models data from Lexus, but have not seen a comparison with German competitors on a model by model basis. I haven't looked very hard, so it may be there and I just missed it (but a check of BMW numbers did not give me a break-out by model).

Based on the article, I am guessing that if one deducts the X3 and GLK unit sales, the competitive comparison may look much more favorable to Lexus. Assuming Lexus hits the 40K sales objective for the NX, and sales in the other model lines don't falter, there should be rough sales parity between the brands by this time next year, and an opportunity for Lexus to regain its former title as the leading luxury car in the U.S.

I tend to agree with St. that the NX has high potential, and that the styling is better than the RX. My wife's '09 RX was our first Lexus, and came to us via an estate sale resulting from death in the family. It was virtually new. We probably would not have seriously considered Lexus otherwise, and the RX styling would be one of the reasons.

[LEX-SV]

RX is still top selling Lexus model, followed by ES, very impressive. And somewhat troubling...

[midwesterner]

Once again, agree.

[LEX-SV]

If Lexus delivers on it's latest goals/objectives, I expect to see more sales volume with better products competing with proven top-selling 3's/5's/C's/E's/S's.

And Lexus finally recognizing (better late than never) importance of high growth compact SUV/crossover market in US with the lauch of an attractive and competitve NX is a good start. RC is another good recent launch that should complete well against 4/A5 and hopefully the new C-class coupe from Mercedes to be released soon. These are the kind of products that I'm expecting and view as necessary to be tops in US premium car business.

[midwesterner]

Concur. Initial reviews on NX appear mixed, so maybe no home run there. A3-based SUV reviews also somewhat mixed, so the two are maybe close. The M-B GLA, however, seems to be garnering very favorable reviews, and looks like maybe the designers put one over the fence.

If we were going to buy another SUV, we'd probably still be looking at an RX-size, so am interested in the successor. Acceleration is acceptable or better for an SUV, so give it a little firmer suspension and make it handle and give it some GS brakes. Finally, sharpen up the styling and maybe we'd be repeat buyers. Absent those steps, the decision would hinge on reliability only.

I continue to believe Japanese management very deliberately targets the customer, and is willing to sacrifice the dedicated Audi, BMW, M-B buyer who might never become a convert anyway.

How about a report on your new Merc before long?

[LEX-SV]

I hear what you are saying about Lexus management kind of stretching painfully slow outside of their comfort zone as they take on dominant BMW/MB. Fortunately we are seeing signs of signicant progress, (besides the lip service which is just that).

Regarding the Merc C250, it's a previous gen (W204, model year 2013 Sport Pkg PLUS loaded, wife uses it as dd, I drive it more on weekends). And so far I like it very much, I'll give a few highlights for now at 24K mi...

. Turbo 4 banger 1.7L is smoothest 4 cylinder engine that I've driven, even in rev range of 5-6K. I'm usually critical of almost all 4 bangers NVH, not in this case.

. Turbo lag is the downside, noticable sometimes at low speeds. Tranny learns based on driver inputs which helps some by downshifting earlier.

. Gas mileage is better by about 10% than IS250/IS350/C300, not 15% better as EPA numbers suggest. Still pretty good mileage. Easy to average 30mpg on freeway trips at 75-80 mph.

. Ride/handling combo is nice w/18's and all seasons. I enjoy driving it more than the C300 Sport w/17's.

. Feels solid like a Benz is expected to, super stiff chassis. MB is pretty good at accomplishing that feel across the board. Some of the old school MB traits have been toned down, like large diameter steering wheels, long travel accelerator, don't miss them.

. Too early to say if reliability is Lexus-like. The last 08 C300 we had for 128K miles was very close and very good.

midwesterner - Give us some feedback on your GS350 when you have a chance. I drove GS350 Fsport on autocross course at a Lexus event, it felt pretty good for mid-sized sedan in that environment.

[midwesterner]

Thanks. I had a new 1996 C-class 180 sport when I lived in the U.K. Could've used a little more power (anything over 2L is a big engine in the U.K.), but rock solid and great highway cruiser. I once drove from Aberdeen, Scotland to the English border without dropping below 90 mph; absolutely stable. Owned the car 3-1/2 years before moving back, and except for a failure with the alarm system (fixed in impressive fashion) the car required only normal service.

By way of background: I have owned BMW (bought new 1600 in 1969 which I took autocrossing and hillclimbing), Audi, M-B, Saab, plus most American brands. Had high performance GM products (including a '68 Olds 442). Drove mostly Hondas in early - mid 90s (Accord for wife; Prelude for me). In addition to the two Lexus (Lexae?), I have a BMW Z4 roadster 3.0 with the touring suspension (staggered tire sizes). My "sweet spot" is a car that weighs about 3500 lbs, offers responsive, nimble handling and excellent braking, with good acceleration and strong mid-range throttle response. BMW 3-series / M-B C-class would be my normal automotive hunting ground.

The '06 Saab Aero turbo V6 that I got rid of met those criteria, giving up a bit to BMW in handling because of FWD vs RWD. Otherwise, it was nearly the perfect road car.

So with that as background, let's see what I can say about the GS. A direct comparison doesn't work because the Lexus is a different and bigger car, and is AWD which changes the feel a bit. I have not driven a 5-series, E-class or A6, so hard to make an evaluation relative to those.

From what I've read in the reviews before and after I bought my car, I think the GS (no f-sport) compares favorably with the standard German offerings in the same size class, and may come off a bit better in some areas.

Overall, I've found the GS to be quiet, rock-sold, and stable -- probably the best highway cruiser we've ever had. Seats are excellent, probably better than the Saab's, which were class-leading at the time. Braking is excellent, easily equal to the Saab, and maybe better. The GS is a bit too big and heavy to really feel nimble, especially with the AWD, but in aggressive driving it stays planted and goes where you point it. Can't quite hang the tail out on a tight curve because of the AWD, but then it sticks like it's on rails.

Acceleration is impressive from rest, and I've surprised a few friends who've ridden with me. Does not quite have Saab's mid-range, part-throttle response, but that's function of weight and turbo-charged vs naturally aspirated. If you floor it, you get plenty of passing power. I let a Buick dealer friend drive it after I declined a turbo Regal, and his response on nailing the throttle at roadspeed was "Wow!"

6-speed auto plenty adequate and about as responsive as a non-dual-clutch transmission is going to be.

Well designed interior except for stupid placements of headlight washer control and cruise control, areas where Lexus engineers need to take lessons from their Euro competitors. Maybe result of being based in a country where speed limits don't exceed 60 mph or so. Excellent materials and high quality throughout, as you would expect from Lexus. Reliability excellent except for a brake switch recall and touchy starter button / ignition / brake interface that sometimes requires multiple attempts before stating.

Bottom line: Quiet, comfortable car that probably challenges or exceeds Euro competitors except in the last ounce or two of sharpness in high-performance driving. But even that is debatable. I can drive comfortably at light throttle, but when the urge or necessity strike, I can give you a pretty good impression of a sports sedan at full tilt.

As a final reference, I drove a '13 IS 250 AWD prior to buying the GS. Liked the car; closer to the size I like. I was considering an IS350 but the combination of Lexus offers on the GS made it a better deal at the time. If the '14 IS 350 had been available, I might well have chosen it over the GS.

Oh, and my wife likes the GS.

A little long; sorry. Hope I addressed your question. I also did a post assessing the car at about the one-year mark. Don't know if it's still accessible.