Lexus is Toyota. Good or bad? In-depth discussion inside
10-20-04, 11:55 AM
#1
Lexus Champion
Thread Starter
Lexus is Toyota. Good or bad? In-depth discussion inside
I started writing this in another thread and realized it was getting longer and longer. But not to toot my own horn or anything, but I think this might honestly be a good insightful read for many people, especially who don't understand economics, or especially to those who are having a hard time coming up with a rebuttal to those who make fun of Lexus because it is owned by Toyota.
Let me put this into economic perspective to you.
BMW goes out to design a car that costs around 50,000 dollars MSRP.
Let's say that 10,000 of that right off the bat goes to dealer profit and BMW's profit. BMW needs a good amount of profit per vehicle becaue it has no other form of income except for Rolls Royce and a couple of other lower-level ventures. This money also goes toward any discounts/rebates/incentives that are given at any given time to accelerate sales or to close any particular sale. Lexus for example may not need as much profit to stay competetive, because they make most of their money off of Toyota sales anyhow. Lexus just adds one more nice figure to the 'profit' column as well as has some other advantages as discussed below.
So now BMW has to make their 50,000 dollar car cost 40,000 to make. This has to not only pay for the materials to build the car, but most of all, it has to pay for research and development, marketing, and all of the overhead expenses such as manufacturing facilities, office space, etc, etc.
Do you remember 'economies of scale' from your economics classes in highschool/college? It's the concept that the more you purchase, the less it costs your supplier to supply you per item and the more "pull" you have in negotiating a better price per part.
If you still don't understand then read this paragraph, if you do, then skip to the next one. As an example of this we'll say you own a small mom and pop shop that sells a bunch of stuff. One of them is candy. You buy the candy straight from Hershey's in Pennsylvania. You have an account rep at Hersheys that takes your orders, which consist of maybe 4,000 dollars worth of candy (what you pay for it) every year. It's a relatively small account for this guy, and he's not even one of their senior reps. He specializes in taking care of the small guys. Still, it takes him a couple of hours a year to maintain your account and make adjustments to your supply and such, plus to colaborate with the delivery guy and have him make a trip out to your shop from time to time. Overall the candy they supply you may only cost them half of what you're paying for it, but when you add the account rep's time, their overhead costs for maintaining an additional account, the delivery guy's time, etc, etc. By the time they add all of this to the actual materials cost, their cost of selling you is relatively high. Thus they have to charge you more, not to mention being that it's a smaller account, if they want to make a worthwhile profit on such a small yearly sale, they need to build in more profit. In the end this causes you to have to charge the consumer a higher price for the exact same quality of item that the Target store down the street is charging. Why can walmart charge less for the exact same quality? Well because they purchase so many millions of dollars in candy every year, so Hersheys has significantly lower overhead costs per unit of candy they sell to Target. Furthermore, if you the shop owner demand a lower price or else you'll stop selling Hershey's candy, they're likely to look at the dismall profit they're already making on your small yearly purchase and laugh and say "go right ahead". If target threatens to do the same, Hersheys will comply in a hurry if they can possibly cut anything off of their prices. Why? Well not only is "lots of business" better than "no business" in terms of making money, but to lose Target as a seller would mean that their overall production would drop and thus their overhead for other suppliers would increase. That's the same reason group buys work on message boards!
I'm sure or at least hope most of you realize that all car manufacturers have the large majority of their raw materials and parts purchased from third party companies. They purchase the steel from particular steel mills, they even purchase parts such as lense covers on dash clusters or tail light assemblies, or wood grain or just about any other single componant of the car from individual suppliers. Those parts are then assembled per the design specs to make the car itself.
When you have a company like Lexus with a parent company like Toyota, it's like having Walmart start up a smaller specialty chain that specializes in high end products for reasonable prices. Walmart can then call their same account rep who supplies their candy for their Walmart stores, and ask their candy supplier for a higher grade of candy but at the same discount that their purchasing power from their walmart stores affords them.
Just like this Lexus can go to their same Toyota parts suppliers, and ask for a higher grade of part along with their much larger order of 'normal' grade parts, but at a steep discount despite the limited quantity because all that company wants to retain the other 90% of their business that Toyota is giving them. Furthermore, if Lexus demands that their Lexus parts meet a certain very tight standard for defective parts per million... something much much more demanding than the current industry average, the parts supplier says "Absolutely we will do it and do it with a smile." rather than "well we'll give it a shot and if it's too hard you can just find somebody else to do it"
In some cases, parts really don't have a higher grade, and thus Lexus just borrows parts from the Toyota parts bin. And anyone who knows Lexus as a company knows that if it can be made better, it will be. If it can't, then it is left alone.
This explains how Lexus can get a better deal on parts due to their parent company being Toyota. Using this logic you can see how a luxury car or any low-volume (exotic handmade italian cars come to mind) company has a much higher cost per part in relation to the quality of the part.
So now we go back to our BMW example for engineering costs. BMW now has to engineer a car from 100% scratch including all of its small accessories and parts. Lets say this costs BMW twenty million dollars because they have to do everything from the ground up. Now let's assume that BMW sells 20,000 of this model of car during its product lifetime (until they do the next ground up redesign). What is their overall cost per car to design? 10,000 dollars per car.
Now let's say Lexus has to design a similar vehicle. Well thier costs are only going to be fifteen million because five million dollars worth of quality engineering and testing from some of their other current Toyota models already answers quite a few questions their engineers would otherwise have had to spend the time and money answering for themselves, and some parts are already in the Toyota parts bin and Toyota knows already that they are not worth the cost of redesigning specifically for their Lexus models. OK so let's just say the Lexus sells the same number of this model as BMW sells of theirs... 20,000 in the product's lifetime. So now we have an engineering cost of 7500 per Lexus vehicle, whereas BMW has an engineering cost per vehicle of 10,000 dollars per car. One is not necessarily engineered better than the other, it's just that one engineering team already had an extensive cache of research and development from which to draw from and improve upon where they saw it would make a difference.
Well let's take this engineering one step further. Let's say the Lexus engineers have tweaked a few of the Toyota designs in a way that makes a nice improvement upon them without actually increasing the production cost of the vehicle. So what does Toyota get to do next time they redesign one of their cars? They can consider implementing this new technology into their new vehicle! So in turn this saves money when Toyota goes to engineer their new vehicles. And being that Toyota is the same company, well they just saved themselves some money which even if it doesn't technically show up in Lexus' accounting books, it benefits the same company in the end thus freeing up even more money for whatever it is needed for in the future.
Oh and one more thing on the note of engineering. When Toyota has 25 times the number of their cars driving around as BMW has of their cars... they have a better sample of which they can determine what designs work and what designs are faulty. This way they can recognize and correct or improve upon their mistakes or faults much more quickly than BMW.
Finally let us consider other overhead such as marketing, administration, facilities, etc. This works on the same economies of scale principle. Even though Lexus' administration and marketing and such is pretty well seperated locally... up top, they are all run by the same people making only one paycheck, and given the level of automation and corporate streamlining that Toyota can afford to do, adding Lexus as one more facility to their company does not increase Toyota's costs as a whole nearly as much as it costs BMW to operate as a lone company. In this same way, Toyota can distribute their same cache of parts through their same network to Lexus dealerships as well, saving even more money.
Anyhow... in conclusion to this and as proof: why do you think Mercedes Benz is now Daimler-Chrysler? Why do you think GM bought/merged with Saab? Why do you think Ford bought/merged with Jaguar? Because economies of scale are the only way to maintain or increase profits while supplying the consumer with a superior product in today's market.
Let me put this into economic perspective to you.
BMW goes out to design a car that costs around 50,000 dollars MSRP.
Let's say that 10,000 of that right off the bat goes to dealer profit and BMW's profit. BMW needs a good amount of profit per vehicle becaue it has no other form of income except for Rolls Royce and a couple of other lower-level ventures. This money also goes toward any discounts/rebates/incentives that are given at any given time to accelerate sales or to close any particular sale. Lexus for example may not need as much profit to stay competetive, because they make most of their money off of Toyota sales anyhow. Lexus just adds one more nice figure to the 'profit' column as well as has some other advantages as discussed below.
So now BMW has to make their 50,000 dollar car cost 40,000 to make. This has to not only pay for the materials to build the car, but most of all, it has to pay for research and development, marketing, and all of the overhead expenses such as manufacturing facilities, office space, etc, etc.
Do you remember 'economies of scale' from your economics classes in highschool/college? It's the concept that the more you purchase, the less it costs your supplier to supply you per item and the more "pull" you have in negotiating a better price per part.
If you still don't understand then read this paragraph, if you do, then skip to the next one. As an example of this we'll say you own a small mom and pop shop that sells a bunch of stuff. One of them is candy. You buy the candy straight from Hershey's in Pennsylvania. You have an account rep at Hersheys that takes your orders, which consist of maybe 4,000 dollars worth of candy (what you pay for it) every year. It's a relatively small account for this guy, and he's not even one of their senior reps. He specializes in taking care of the small guys. Still, it takes him a couple of hours a year to maintain your account and make adjustments to your supply and such, plus to colaborate with the delivery guy and have him make a trip out to your shop from time to time. Overall the candy they supply you may only cost them half of what you're paying for it, but when you add the account rep's time, their overhead costs for maintaining an additional account, the delivery guy's time, etc, etc. By the time they add all of this to the actual materials cost, their cost of selling you is relatively high. Thus they have to charge you more, not to mention being that it's a smaller account, if they want to make a worthwhile profit on such a small yearly sale, they need to build in more profit. In the end this causes you to have to charge the consumer a higher price for the exact same quality of item that the Target store down the street is charging. Why can walmart charge less for the exact same quality? Well because they purchase so many millions of dollars in candy every year, so Hersheys has significantly lower overhead costs per unit of candy they sell to Target. Furthermore, if you the shop owner demand a lower price or else you'll stop selling Hershey's candy, they're likely to look at the dismall profit they're already making on your small yearly purchase and laugh and say "go right ahead". If target threatens to do the same, Hersheys will comply in a hurry if they can possibly cut anything off of their prices. Why? Well not only is "lots of business" better than "no business" in terms of making money, but to lose Target as a seller would mean that their overall production would drop and thus their overhead for other suppliers would increase. That's the same reason group buys work on message boards!
I'm sure or at least hope most of you realize that all car manufacturers have the large majority of their raw materials and parts purchased from third party companies. They purchase the steel from particular steel mills, they even purchase parts such as lense covers on dash clusters or tail light assemblies, or wood grain or just about any other single componant of the car from individual suppliers. Those parts are then assembled per the design specs to make the car itself.
When you have a company like Lexus with a parent company like Toyota, it's like having Walmart start up a smaller specialty chain that specializes in high end products for reasonable prices. Walmart can then call their same account rep who supplies their candy for their Walmart stores, and ask their candy supplier for a higher grade of candy but at the same discount that their purchasing power from their walmart stores affords them.
Just like this Lexus can go to their same Toyota parts suppliers, and ask for a higher grade of part along with their much larger order of 'normal' grade parts, but at a steep discount despite the limited quantity because all that company wants to retain the other 90% of their business that Toyota is giving them. Furthermore, if Lexus demands that their Lexus parts meet a certain very tight standard for defective parts per million... something much much more demanding than the current industry average, the parts supplier says "Absolutely we will do it and do it with a smile." rather than "well we'll give it a shot and if it's too hard you can just find somebody else to do it"
In some cases, parts really don't have a higher grade, and thus Lexus just borrows parts from the Toyota parts bin. And anyone who knows Lexus as a company knows that if it can be made better, it will be. If it can't, then it is left alone.
This explains how Lexus can get a better deal on parts due to their parent company being Toyota. Using this logic you can see how a luxury car or any low-volume (exotic handmade italian cars come to mind) company has a much higher cost per part in relation to the quality of the part.
So now we go back to our BMW example for engineering costs. BMW now has to engineer a car from 100% scratch including all of its small accessories and parts. Lets say this costs BMW twenty million dollars because they have to do everything from the ground up. Now let's assume that BMW sells 20,000 of this model of car during its product lifetime (until they do the next ground up redesign). What is their overall cost per car to design? 10,000 dollars per car.
Now let's say Lexus has to design a similar vehicle. Well thier costs are only going to be fifteen million because five million dollars worth of quality engineering and testing from some of their other current Toyota models already answers quite a few questions their engineers would otherwise have had to spend the time and money answering for themselves, and some parts are already in the Toyota parts bin and Toyota knows already that they are not worth the cost of redesigning specifically for their Lexus models. OK so let's just say the Lexus sells the same number of this model as BMW sells of theirs... 20,000 in the product's lifetime. So now we have an engineering cost of 7500 per Lexus vehicle, whereas BMW has an engineering cost per vehicle of 10,000 dollars per car. One is not necessarily engineered better than the other, it's just that one engineering team already had an extensive cache of research and development from which to draw from and improve upon where they saw it would make a difference.
Well let's take this engineering one step further. Let's say the Lexus engineers have tweaked a few of the Toyota designs in a way that makes a nice improvement upon them without actually increasing the production cost of the vehicle. So what does Toyota get to do next time they redesign one of their cars? They can consider implementing this new technology into their new vehicle! So in turn this saves money when Toyota goes to engineer their new vehicles. And being that Toyota is the same company, well they just saved themselves some money which even if it doesn't technically show up in Lexus' accounting books, it benefits the same company in the end thus freeing up even more money for whatever it is needed for in the future.
Oh and one more thing on the note of engineering. When Toyota has 25 times the number of their cars driving around as BMW has of their cars... they have a better sample of which they can determine what designs work and what designs are faulty. This way they can recognize and correct or improve upon their mistakes or faults much more quickly than BMW.
Finally let us consider other overhead such as marketing, administration, facilities, etc. This works on the same economies of scale principle. Even though Lexus' administration and marketing and such is pretty well seperated locally... up top, they are all run by the same people making only one paycheck, and given the level of automation and corporate streamlining that Toyota can afford to do, adding Lexus as one more facility to their company does not increase Toyota's costs as a whole nearly as much as it costs BMW to operate as a lone company. In this same way, Toyota can distribute their same cache of parts through their same network to Lexus dealerships as well, saving even more money.
Anyhow... in conclusion to this and as proof: why do you think Mercedes Benz is now Daimler-Chrysler? Why do you think GM bought/merged with Saab? Why do you think Ford bought/merged with Jaguar? Because economies of scale are the only way to maintain or increase profits while supplying the consumer with a superior product in today's market.
Last edited by Threxx; 10-20-04 at 11:57 AM.
10-20-04, 12:05 PM
#2
Lexus Champion
Thread Starter
Ooops... sorry guys... I meant to post this in car chat. I tried to delete the thread and repost it but it wouldn't let me delete.... if a mod wants to move this to the appropriate forum I would appreciate it.
10-20-04, 12:54 PM
#5
Will there be a quiz on this? 
Good explination...
No matter how hard or detailed the facts are behind this are, there are those that will forever remain clueless because they don't want to become enlightened or proven otherwise. There are also those who think everything is cheaply manufacturered in some far east plant and marked up with various name plates. In many instances, their resistence to such is warranted and they have learned to be that way no matter.
for trying to spread the word. If you start hanging out at airports and shopping malls to explain this, it may have gone too far.
Good explination...No matter how hard or detailed the facts are behind this are, there are those that will forever remain clueless because they don't want to become enlightened or proven otherwise. There are also those who think everything is cheaply manufacturered in some far east plant and marked up with various name plates. In many instances, their resistence to such is warranted and they have learned to be that way no matter.
for trying to spread the word. If you start hanging out at airports and shopping malls to explain this, it may have gone too far.
Last edited by RA40; 10-20-04 at 12:55 PM.
10-20-04, 01:42 PM
#7
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I think your argument might be ever-so-slightly flawed. That's not exactly the way Lexus works. I think you're over-simplifying it a good deal.
"Lexus" doesn't take a "Toyota" and just jazz it up. Rather, more increasingly, Toyotas are really just scaled-down Lexus models.
Like the Highlander. It's the reason why the current Camry is quieter than the last-generation ES. So it would surprise you to know Toyota controls, owns, and manufactures (to some degree) a good deal of the materials used in the production of their vehicles? Lexus most certainly doesn't do third-party. Even a major supplier like Denso might as well be called Toyota. Part of the reason Toyota/Lexus is so high quality is that they are often their suppliers' only client!
No one will argue that a ES330 is not a distinctly different vehicle from the base Camry with wheel covers and drum brakes. All this was taken into account during the design process, and Toyota was really designing 2 cars at the same time to the tune of nearly 1/5 billion dollars. It's far too simple to say they save money and make profit just by ordering large quantities, even in different spec, and benefit from more dilligent engineering. I've often tried to think about the way Toyota brings a car from concept to showroom, and it never fails to blow my mind.
However, much of what you said about price in relation to quality and quantity is true, but can't be applied directly to Toyota/Lexus. But it applies nicely to American car makers who make scores of clones.
Your post is just the tip of the iceberg. I would really like to see a book published sometime in the future that chronicles the step-by-step development of a Lexus vehicle from the ground up. I'd like to think I would be able to do it sometime many years from now, but one would have to be a skilled and thoroughly knowledgable engineer, economist, and writer to accomplish that. Not to mention convincing Toyota to grant them the far-reaching access needed to accomplish such a product. Jeez, we barely have any photos/video of Toyota/Lexus plants.
I'm not gonna hold my breath.
Anyway,
"Lexus" doesn't take a "Toyota" and just jazz it up. Rather, more increasingly, Toyotas are really just scaled-down Lexus models.
Like the Highlander. It's the reason why the current Camry is quieter than the last-generation ES. So it would surprise you to know Toyota controls, owns, and manufactures (to some degree) a good deal of the materials used in the production of their vehicles? Lexus most certainly doesn't do third-party. Even a major supplier like Denso might as well be called Toyota. Part of the reason Toyota/Lexus is so high quality is that they are often their suppliers' only client!
No one will argue that a ES330 is not a distinctly different vehicle from the base Camry with wheel covers and drum brakes. All this was taken into account during the design process, and Toyota was really designing 2 cars at the same time to the tune of nearly 1/5 billion dollars. It's far too simple to say they save money and make profit just by ordering large quantities, even in different spec, and benefit from more dilligent engineering. I've often tried to think about the way Toyota brings a car from concept to showroom, and it never fails to blow my mind.
However, much of what you said about price in relation to quality and quantity is true, but can't be applied directly to Toyota/Lexus. But it applies nicely to American car makers who make scores of clones.
Your post is just the tip of the iceberg. I would really like to see a book published sometime in the future that chronicles the step-by-step development of a Lexus vehicle from the ground up. I'd like to think I would be able to do it sometime many years from now, but one would have to be a skilled and thoroughly knowledgable engineer, economist, and writer to accomplish that. Not to mention convincing Toyota to grant them the far-reaching access needed to accomplish such a product. Jeez, we barely have any photos/video of Toyota/Lexus plants.
I'm not gonna hold my breath. Anyway,
Last edited by SecPole14; 10-20-04 at 01:43 PM.
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10-20-04, 02:01 PM
#8
Lexus Champion
Thread Starter
Originally posted by wantAnewLex
I think your argument might be ever-so-slightly flawed. That's not exactly the way Lexus works. I think you're over-simplifying it a good deal.
"Lexus" doesn't take a "Toyota" and just jazz it up. Rather, more increasingly, Toyotas are really just scaled-down Lexus models.
Like the Highlander. It's the reason why the current Camry is quieter than the last-generation ES. So it would surprise you to know Toyota controls, owns, and manufactures (to some degree) a good deal of the materials used in the production of their vehicles? Lexus most certainly doesn't do third-party. Even a major supplier like Denso might as well be called Toyota. Part of the reason Toyota/Lexus is so high quality is that they are often their suppliers' only client!
No one will argue that a ES330 is not a distinctly different vehicle from the base Camry with wheel covers and drum brakes. All this was taken into account during the design process, and Toyota was really designing 2 cars at the same time to the tune of nearly 1/5 billion dollars. It's far too simple to say they save money and make profit just by ordering large quantities, even in different spec, and benefit from more dilligent engineering. I've often tried to think about the way Toyota brings a car from concept to showroom, and it never fails to blow my mind.
However, much of what you said about price in relation to quality and quantity is true, but can't be applied directly to Toyota/Lexus. But it applies nicely to American car makers who make scores of clones.
Your post is just the tip of the iceberg. I would really like to see a book published sometime in the future that chronicles the step-by-step development of a Lexus vehicle from the ground up. I'd like to think I would be able to do it sometime many years from now, but one would have to be a skilled and thoroughly knowledgable engineer, economist, and writer to accomplish that. Not to mention convincing Toyota to grant them the far-reaching access needed to accomplish such a product. Jeez, we barely have any photos/video of Toyota/Lexus plants. I'm not gonna hold my breath.
Anyway,
I think your argument might be ever-so-slightly flawed. That's not exactly the way Lexus works. I think you're over-simplifying it a good deal.
"Lexus" doesn't take a "Toyota" and just jazz it up. Rather, more increasingly, Toyotas are really just scaled-down Lexus models.
Like the Highlander. It's the reason why the current Camry is quieter than the last-generation ES. So it would surprise you to know Toyota controls, owns, and manufactures (to some degree) a good deal of the materials used in the production of their vehicles? Lexus most certainly doesn't do third-party. Even a major supplier like Denso might as well be called Toyota. Part of the reason Toyota/Lexus is so high quality is that they are often their suppliers' only client!
No one will argue that a ES330 is not a distinctly different vehicle from the base Camry with wheel covers and drum brakes. All this was taken into account during the design process, and Toyota was really designing 2 cars at the same time to the tune of nearly 1/5 billion dollars. It's far too simple to say they save money and make profit just by ordering large quantities, even in different spec, and benefit from more dilligent engineering. I've often tried to think about the way Toyota brings a car from concept to showroom, and it never fails to blow my mind.
However, much of what you said about price in relation to quality and quantity is true, but can't be applied directly to Toyota/Lexus. But it applies nicely to American car makers who make scores of clones.
Your post is just the tip of the iceberg. I would really like to see a book published sometime in the future that chronicles the step-by-step development of a Lexus vehicle from the ground up. I'd like to think I would be able to do it sometime many years from now, but one would have to be a skilled and thoroughly knowledgable engineer, economist, and writer to accomplish that. Not to mention convincing Toyota to grant them the far-reaching access needed to accomplish such a product. Jeez, we barely have any photos/video of Toyota/Lexus plants.
I'm not gonna hold my breath. Anyway,
I never have thought that Lexus models are just jazzed up Toyotas, I'm very familiar with the differences and similarities in their lineage.
What you have to realize is that even if certain or even all engineering SPECS on a particular subsystem of a vehicle are completely different, they may share quite a few of the same practices or concepts in design. These practices and concepts in design can be shared and improved upon from those perfected in building lower-budget vehicles, and then refined even further using a more flexible budget, in Lexus models.
So I'm not trying to specify exactly how Toyotas related to Lexus models in design, I'm simply trying to demonstrate how Toyota engineering can benefit Lexus engineering and vice-versus.
And unless I've been misinformed time and time again, I think if you look at the actual raw materials (molded individual pieces) Lexus uses are from 3rd party manufacturers. Many or even most of those manufacturers may have the majority of even essentially all of their business coming from Toyota, but the concept still works the same in economic terms, and especially for the purpose of keeping my initial post from being any longer.
Denso is much like Delphi in the fact that they were both originally many different suppliers, but again, due to economy of scales, they were purchased and combined into one consolidated company by their majority purchasing agent (Toyota in Denso's case and Delphi in GM's case). So yes, in the case of electronics systems, Denso and Delphi are basically Toyota and GM's cousin companies and even though they both operate mostly on their freewill, there is no "push-pull" type relationship anymore. But still consider this... most of the stuff Delphi or Denso supplies is not made from scratch in house, even Delphi/Denso buys their stuff from 3rd party suppliers who build their raw materials to Delphi/Denso's specifications.
10-20-04, 02:27 PM
#9
Guest
Posts: n/a
Threxx, incredible discussion. We need more of this. I hope my thoughts help some.
First, people need to understand that no matter WHAT a car is badged, if the product is worth it, why fuss over a badge.
For instande, the LS 430 aka Toyota Celsior is hailed as pretty much the grandest sedan for the money. Lexus/Toyota made it that way, invested in the R&D to make it the best. It costs 72k loaded!
So no matter if it's BADGED a Lexus or a Toyota, its still a 72k car! You cannot take that away.
As for BMW, they are the most profitable company behind Porsche. So CLEARLY, their products are over-priced. I can't find the article but they are BOLD and ARROGANT. A spokesperson said about the new 5 series 'yes it does cost more than everyone else and it should, its the best and people will pay"WTF? This is the same company telling PEOPLE "we are too dumb to understand their styling direction".WTF?
BMWs do have HUGE UNIONS to pay. it is a problem in Germany, the stranglehold the Unions have. This increases cost. BMW has another issue. Bitkauha asked me at a meet once "where do we get our electronics from"? I said "Japan". He said correct, so why should I think a German made car with computers will work?
Excellent point. As computers are more and more important in cars, it wil cause the Germans most issues. Just look at the NAV. Look at Lexus/Infiniti/Acura Nav to Benz/BMW/Audi. Its not even close. That is why tons of BMW/Benz owners SWEAR the older cars are better built. No money needed for computers. It was invested in the car. Sitting in a 20 year old BMW/Benz feels like a bank vault still.
BMW has proven, build your BRAND, build cars people want, even if it's handful of M3s/M5s etc and let that trickle down to 325s and 1-series cars. Build sporty cars and an IMAGE of superiority and people will buy it. They have. BMW is still FAMILY owned. Toyota is one of the largest companies in the WORLD. Both are highly profitable.
Now your missing a key thing. Toyota maybe the ONLY company to WORK WITH suppliers! In the end, it makes a better product. If suppliers cannot figure out a quality product, Toyota will SEND ENGINEERS to help!
Compare this with GM for instance, basically SQUEEZING suppliers ***** until they just drop the ball. (lol). That is why their interiors are cheap, why they rattle after 3 months. The suppliers have to cut costs as they fight for the lOWEST BID to keep their contract.
You did know the Space Shuttle is built by the LOWEST bidders right?
That is why TOyota is the best built car. A car is not ALL TOYOTA. Frame, engine, a couple other things, that is about it. The rest is OUTSOURCED.
I do agree with wantanewlex that tech trickles DOWN! Toyota is the best quality company. It is natural for their luxury division to extend this. Now lets look.
The Toyota Sienna is been called by every mag a "lexus van". Its that well built.
The ES is the more reliable car and more luxurious for the price. This trickles to the Camry, which has been the best seller the past 4 years.
Ya'll used the Highlander example.
The new Avalon will be a mini-LS 430.
Yes, Toyota does have size on it's side. But its bigger than that. They are the envy of the management business. They keep workers loyal and motivated. There is a certain PRIDE of building the best built cars. They also see long-term. That is why Toyota has TONS of SUVs now. Now they are going to be hybrid leaders.
As for the mergers, well yes, its to have worldwide cars. its also b/c the more expensive the car, the more profit. It's also b/c the smaller companies realize to survive they have to merge. But looking at Ford, their LandRover, Jaguar, Lincoln diviision are not doing well. Only Aston MArtin.
First, people need to understand that no matter WHAT a car is badged, if the product is worth it, why fuss over a badge.
For instande, the LS 430 aka Toyota Celsior is hailed as pretty much the grandest sedan for the money. Lexus/Toyota made it that way, invested in the R&D to make it the best. It costs 72k loaded!
So no matter if it's BADGED a Lexus or a Toyota, its still a 72k car! You cannot take that away.
As for BMW, they are the most profitable company behind Porsche. So CLEARLY, their products are over-priced. I can't find the article but they are BOLD and ARROGANT. A spokesperson said about the new 5 series 'yes it does cost more than everyone else and it should, its the best and people will pay"WTF? This is the same company telling PEOPLE "we are too dumb to understand their styling direction".WTF?
BMWs do have HUGE UNIONS to pay. it is a problem in Germany, the stranglehold the Unions have. This increases cost. BMW has another issue. Bitkauha asked me at a meet once "where do we get our electronics from"? I said "Japan". He said correct, so why should I think a German made car with computers will work?
Excellent point. As computers are more and more important in cars, it wil cause the Germans most issues. Just look at the NAV. Look at Lexus/Infiniti/Acura Nav to Benz/BMW/Audi. Its not even close. That is why tons of BMW/Benz owners SWEAR the older cars are better built. No money needed for computers. It was invested in the car. Sitting in a 20 year old BMW/Benz feels like a bank vault still.
BMW has proven, build your BRAND, build cars people want, even if it's handful of M3s/M5s etc and let that trickle down to 325s and 1-series cars. Build sporty cars and an IMAGE of superiority and people will buy it. They have. BMW is still FAMILY owned. Toyota is one of the largest companies in the WORLD. Both are highly profitable.
Now your missing a key thing. Toyota maybe the ONLY company to WORK WITH suppliers! In the end, it makes a better product. If suppliers cannot figure out a quality product, Toyota will SEND ENGINEERS to help!
Compare this with GM for instance, basically SQUEEZING suppliers ***** until they just drop the ball. (lol). That is why their interiors are cheap, why they rattle after 3 months. The suppliers have to cut costs as they fight for the lOWEST BID to keep their contract.
You did know the Space Shuttle is built by the LOWEST bidders right?
That is why TOyota is the best built car. A car is not ALL TOYOTA. Frame, engine, a couple other things, that is about it. The rest is OUTSOURCED.
I do agree with wantanewlex that tech trickles DOWN! Toyota is the best quality company. It is natural for their luxury division to extend this. Now lets look.
The Toyota Sienna is been called by every mag a "lexus van". Its that well built.
The ES is the more reliable car and more luxurious for the price. This trickles to the Camry, which has been the best seller the past 4 years.
Ya'll used the Highlander example.
The new Avalon will be a mini-LS 430.
Yes, Toyota does have size on it's side. But its bigger than that. They are the envy of the management business. They keep workers loyal and motivated. There is a certain PRIDE of building the best built cars. They also see long-term. That is why Toyota has TONS of SUVs now. Now they are going to be hybrid leaders.
As for the mergers, well yes, its to have worldwide cars. its also b/c the more expensive the car, the more profit. It's also b/c the smaller companies realize to survive they have to merge. But looking at Ford, their LandRover, Jaguar, Lincoln diviision are not doing well. Only Aston MArtin.
10-20-04, 02:34 PM
#10
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So in essence Lexus is blessed to have Toyota as a parent. No one is even close. Competition:
Acura-Honda. First to the market and fell asleep for almost 10 years. Stays 2nd tier and turned it around.
Infiniti-Nissan-Infiniti almost was discontinued. A failure for 14 years. Turned it around some 2 years ago.
Amanti-Mazda-Mazda was so broke, they could not complete this plan. The Mazda Millinia was to be an Amanti entry level car. Ford has a controling interest in Ford (owns 51% of the stock I think).
Mitsubishi-abandoned by DaimlerChrysler, they may go bye-bye.
Acura-Honda. First to the market and fell asleep for almost 10 years. Stays 2nd tier and turned it around.
Infiniti-Nissan-Infiniti almost was discontinued. A failure for 14 years. Turned it around some 2 years ago.
Amanti-Mazda-Mazda was so broke, they could not complete this plan. The Mazda Millinia was to be an Amanti entry level car. Ford has a controling interest in Ford (owns 51% of the stock I think).
Mitsubishi-abandoned by DaimlerChrysler, they may go bye-bye.
10-20-04, 02:39 PM
#11
Lexus Champion
Thread Starter
1SICKLEX, thanks for your input. I don't have time right now to write too much but I did want to point out that most computer hardware and software in the world is actually sourced from the US. Japan is closely at our heals and even leads in some markets, so they still put Europe to shame for the most part, but the US is definitely the worldwide IT industry's silicone and software powerhouse.
The best nav system on the market by a long shot right now IMO is the Honda/Acura system. That system was actually developed mostly stateside in conjunction between Honda's engineers and IBM which is primarily a domestic-based company.
The best nav system on the market by a long shot right now IMO is the Honda/Acura system. That system was actually developed mostly stateside in conjunction between Honda's engineers and IBM which is primarily a domestic-based company.
10-20-04, 02:41 PM
#12
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Originally posted by Threxx
1SICKLEX, thanks for your input. I don't have time right now to write too much but I did want to point out that most computer hardware and software in the world is actually sourced from the US. Japan is closely at our heals and even leads in some markets, so they still put Europe to shame for the most part, but the US is definitely the worldwide IT industry's silicone and software powerhouse.
The best nav system on the market by a long shot right now IMO is the Honda/Acura system. That system was actually developed mostly stateside in conjunction between Honda's engineers and IBM which is primarily a domestic-based company.
1SICKLEX, thanks for your input. I don't have time right now to write too much but I did want to point out that most computer hardware and software in the world is actually sourced from the US. Japan is closely at our heals and even leads in some markets, so they still put Europe to shame for the most part, but the US is definitely the worldwide IT industry's silicone and software powerhouse.
The best nav system on the market by a long shot right now IMO is the Honda/Acura system. That system was actually developed mostly stateside in conjunction between Honda's engineers and IBM which is primarily a domestic-based company.
GO USA!!! Thanks, that is great to know.
10-20-04, 04:13 PM
#13
Lexus Fanatic
Originally posted by Threxx
The best nav system on the market by a long shot right now IMO is the Honda/Acura system. That system was actually developed mostly stateside in conjunction between Honda's engineers and IBM which is primarily a domestic-based company.
The best nav system on the market by a long shot right now IMO is the Honda/Acura system. That system was actually developed mostly stateside in conjunction between Honda's engineers and IBM which is primarily a domestic-based company.
Honda / Acura, IMO, is also the equal of Toyota / Lexus in build quality, ( TL trannies excepted) but Acura has suffered from very poor marketing...just like Subaru did before the days of the Outback.
10-20-04, 04:24 PM
#14
Lexus Fanatic
Threxx...that was quite a post. A lot of interesting info.
You make an interesting comparison between BMW and Toyota on economies of scale. But there is a reason that BMW has stayed independent all this time. The company realizes that it and it alone is the company that is dedicated to building all-out drivers' cars more than anyone else. Yes...you have Porsche, but Porsches, Cayenne excepted, are not practical for any more than 2 people. BMW would not still be the Ultimate Driving Machine if it had become just another Ford or GM division. Yes, I know....Chris Bangle has done a lot of damage in the last few years but that is another matter entirely.....that has nothing to do with economies of scale.
You make an interesting comparison between BMW and Toyota on economies of scale. But there is a reason that BMW has stayed independent all this time. The company realizes that it and it alone is the company that is dedicated to building all-out drivers' cars more than anyone else. Yes...you have Porsche, but Porsches, Cayenne excepted, are not practical for any more than 2 people. BMW would not still be the Ultimate Driving Machine if it had become just another Ford or GM division. Yes, I know....Chris Bangle has done a lot of damage in the last few years but that is another matter entirely.....that has nothing to do with economies of scale.
10-20-04, 04:48 PM
#15
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Originally posted by 1SICKLEX
As for BMW, they are the most profitable company behind Porsche. So CLEARLY, their products are over-priced.
As for BMW, they are the most profitable company behind Porsche. So CLEARLY, their products are over-priced.
Porsche is most profitable by volume.
If Toyota wasn't so busy w/expansion, I would think they would be more profitable by volume too.