Lexus strives to remain luxury leader; all sedans to be redesigned by end of '06
01-25-05, 10:13 AM
#1
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Lexus strives to remain luxury leader; all sedans to be redesigned by end of '06
With all four of its sedans scheduled for redesign by the end of 2006, Lexus stands a strong chance of extending its five-year streak as the best-selling luxury brand in the United States.
Lexus Division General Manager Denny Clements says Lexus can grow from 287,927 units sold in 2004 to 350,000 units by the end of the decade, an annual growth rate of 3.3 percent.
The growth will be from customer demand, not from the factory pushing units on the market, Clement says.
"Lexus is going to be the pre-eminent luxury-car brand in the world," Clements says. "We're not about volume any more. We're out of our adolescence. It's about who we're going to be as a brand."
Lexus could crank up production to ensure its place on the luxury throne, but it will not, as it would cost the brand its prestige status, he says.
"We could jack our inventory up to 40 days supply for a great last quarter," Clements says. "But then a year later we're putting $3,000 on a car to move it." Lexus spent less than $300 per unit on loan and lease incentives last year, despite an aging product line, he says.
"It's more important to keep our grosses," Clements says. "If I see our grosses drop, I'll increase advertising, increase promotions and cut production. We can't be like Toyota and just have a sale."
Jim Hall, analyst with AutoPacific in Southfield, Mich., says the expanded luxury market means that hitting 350,000 units is achievable. That would put it close to Cadillac's peak year of 350,813 units in 1978. That year, the U.S. industry sold 14.9 million units.
"Lexus hitting 350,000 may be attainable without tarnishing the brand by chasing the bottom feeders like the Audi A3," Hall says.
He adds: "It depends on the number of competitors Lexus is facing, especially since more are coming."
Lexus' 208 dealers have prepared for the increased customer count, pouring $1.5 billion into store upgrades in the past three years. Some dealers have quadrupled the number of their service bays.
Because Lexus has a 67 percent service retention rate, Clements estimates 900 more stalls and 800 more technicians still are needed. That's despite Lexus adding between four and seven new stores a year, mostly satellite locations.
http://www.autoweek.com/news.cms?newsId=101663
Lexus Division General Manager Denny Clements says Lexus can grow from 287,927 units sold in 2004 to 350,000 units by the end of the decade, an annual growth rate of 3.3 percent.
The growth will be from customer demand, not from the factory pushing units on the market, Clement says.
"Lexus is going to be the pre-eminent luxury-car brand in the world," Clements says. "We're not about volume any more. We're out of our adolescence. It's about who we're going to be as a brand."
Lexus could crank up production to ensure its place on the luxury throne, but it will not, as it would cost the brand its prestige status, he says.
"We could jack our inventory up to 40 days supply for a great last quarter," Clements says. "But then a year later we're putting $3,000 on a car to move it." Lexus spent less than $300 per unit on loan and lease incentives last year, despite an aging product line, he says.
"It's more important to keep our grosses," Clements says. "If I see our grosses drop, I'll increase advertising, increase promotions and cut production. We can't be like Toyota and just have a sale."
Jim Hall, analyst with AutoPacific in Southfield, Mich., says the expanded luxury market means that hitting 350,000 units is achievable. That would put it close to Cadillac's peak year of 350,813 units in 1978. That year, the U.S. industry sold 14.9 million units.
"Lexus hitting 350,000 may be attainable without tarnishing the brand by chasing the bottom feeders like the Audi A3," Hall says.
He adds: "It depends on the number of competitors Lexus is facing, especially since more are coming."
Lexus' 208 dealers have prepared for the increased customer count, pouring $1.5 billion into store upgrades in the past three years. Some dealers have quadrupled the number of their service bays.
Because Lexus has a 67 percent service retention rate, Clements estimates 900 more stalls and 800 more technicians still are needed. That's despite Lexus adding between four and seven new stores a year, mostly satellite locations.
http://www.autoweek.com/news.cms?newsId=101663
01-25-05, 02:56 PM
#2
I think this is great for L. They may be able to make and sell more, I hope they will address this with the service bays with this possible increase.
Some of the local Lexus dealers have a hard time as is keeping up on maintenace. I've heard more than enough complaints about 3+ hour oil changes and parts delays. Most parts typically overnight but that means more loaners and there aren't enough of those. Last time I tried to have some work done at Cerritos, I couldn't even get an appointment/service writer to call me back about it.
One fellow I had talked to praised the service at Fletcher Jones MB in Newport. While he may not like the car, he liked the service. He likes the Lexus but not thee service.
Some of the local Lexus dealers have a hard time as is keeping up on maintenace. I've heard more than enough complaints about 3+ hour oil changes and parts delays. Most parts typically overnight but that means more loaners and there aren't enough of those. Last time I tried to have some work done at Cerritos, I couldn't even get an appointment/service writer to call me back about it.
One fellow I had talked to praised the service at Fletcher Jones MB in Newport. While he may not like the car, he liked the service. He likes the Lexus but not thee service.
Last edited by RA40; 01-25-05 at 03:08 PM.
01-25-05, 09:35 PM
#3
this is good news. it shows how much confidence lexus has in their cars. it's almost like do it or die, but i think they are confident. i wonder what the new LS would be like (not the spy, but the real deal). it's going to be sick. just about time for my next car 
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