yevlem

Hello all!

Perhaps not really a place to discuss the matter, but, on the other hand, why not?

There is no Lexus dealership in Ukraine. "So what?" - may you ask. If one comes here , he/she will be much surprised by how many new lexuses are on the road. All of them came directly either from the USA or Arabic Emirates (as the prices for lexus in these coutnries are the best). The most popular models are RX 2004 and up (just near my office we have 4 of them) with LX 470 and GX 470 following the trend. GS of the last generation is also often met on the roads. Majority of these cars come with navigation, rear entertainment and all the bells and whistles the Lexus might supply.
And, of course,all of these cars need professional service, which they can hardly find (I know it personally).

The popularity of Lexus can be explained as it has extremely competitive pricing versus European manufacturers here. For example, in the USA the RX 330 2WD starts ca. 37,000 USD and Audi Q7 about 39,000 USD. Here, the RX330 2WD brougt from the USA is about 65,000 USD (the high duty and VAT), while AudiQ7 almost 90,000 USD!

So, it seems to be a great opprtunity to start a Lexus dealership here, in Ukraine even before the Toyota decides to make an official distributorship. Of course, any current US dealer of Lexus (if he is not afraid of starting operations abroad) has extreme advantage to suceed not only in opening a dealership (supplying cars from the USA and giving a good service), but also obtainign the distribution rights as soon as Toyota moves here officialy

Again, I understand that it is clearly NOT discussion for web forum, but I am sure here are many people, connected to the current Lexus business, who might be interested in a new opportunity. If so, we can go to off-forum discussion, where I can provied more credentials and references on my side as well as more information.

Just to remind that Ukraine is country of 46 million population with fast frowing economy ans very stable local currency.

Yevgen
PS Sorry for my English - it is my third language.

spwolf

Well, Lexus dealer from USA can NOT import cars and sell them official in Ukraine.
It has to go through Lexus Europe, end of story there. Thats not open for discussion at all.

How is your Toyota distributer there? Because first connection will have to be through them.
I would think that the main reason for Toyota Ukraine not opening Lexus dealership there would be gray imports that are cheaper than Lexus Europe pricing.

I would look into:
- Hows Toyota Ukraine handling gray imports and if it is an big issue for them?
- Hows Toyota Ukraine happy with their customers going back to their service shops instead of cheap indenpendent shops?

From this latest news on their website, I would think it is an big issue for them:
http://www.toyota.ua/about/news_and_events/grey.asp

I see that Toyota Ukraine has only 7 dealers so far. That is an very low number and shows that market is not big enough yet. You have to invest 3x more money in Lexus dealership than Toyota, and you have to work with different set of standards. With so little Toyota dealers there, you have bigger opportunity to make money on Toyota and THEN move to Lexus. Toyota's margins are best in the business, as is their dealer sales and service support.

Lexmex

I will give you another perspective.

In Mexico, we only have Toyota. They have had dealerships open for more than 4 years, but still no Lexus. Acura opened in Dec. 2004 and Infiniti (though with only two models ever in Mexico) has been here since the early 90s, though not very successful. Acura is doing a little better.

I have repeatedly asked Toyota Mexico and Toyota USA about it. With a new trade treaty between Japan and Mexico along with NAFTA, the time seems ideal. Every year, I hear a different story even going as specific as which models they are going to bring in. Throughout Central America and in some parts of South America (Bolivia (one model) and Brazil (2 models I believe now) Lexus is sold via Toyota. I hear about a similar strategy that will be take in Mexico.

After talking to a few more people in the know, it appears that Toyota is still doing a wait and see strategy to see how it pans out with Acura and various economic conditions to see when they will enter.

Both Alfa Romeo and Smart were grey market in Mexico for years, even Hummer for a short time, but eventually GM (Alfa, Hummer) and Smart (Mercedes) got involved and opened up official dealerships due to the demand. I rarely see a Lexus down here, but I remember that the pressure with the aforementioned vehicles worked enough to force official entrance.

yevlem

Dear spwolf!
First of all, I really appreciate your detailed and interesting reply. Thank you.

I understand that clearly and, perhaps, my wording was not clear. Of course, no dealer can officialy import to Ukraine. But is there anything, which prevents a dealer for opening a joint/own company in Ukraine, which specialiaes in serving of the cars already on market (of course, without any claims regarding 'official status'.) Is there anything, which prevents a dealer from discussing with his/her contacts at Lexus an opportunity to obtain a dsitribution rights for Ukraine - through Lexus USA or Europe or other authorized body?
Many (hundreds) of new Lexus are coming to the country from the USA and there is nothing wrong for a dealer to sell a car to anyone in the USA as well as the buyer has a right to export his car (like mine) or even destroy it

The main reason that Toyota itselj just opened a company in Ukraine -perhaps one year ago. before that, it worked through the distributor. I think they will have no time for Lexus in a foreseen future. So, if there is a theoretical opportunity to make few steps towards obtaining a distribution, it might be reasonalbe. (Of course, it is a big deal of talks).
Gray import is a big issue for a Toyota, as they do sell through Europe and depend on strong euro, while gray importerts bring cars from the USA and Arabic countries in dollars, sot he price difference is substantial. Still, Toyota has a big line of customers, willing to buy their cars.
The same is about service. Toyota has few of them and they are always busy in serving the customers, so usually you should wait up to one week before they can get your car for service -if you don't have an urgent issue.

The biggest reason for gray import is also options lists, provided by Toyota here and elsewhere and model selections. For example, there are many Matrix, Solara and Avalon cars coming as Toyota doesn't supply them officially. For Lexus, people usually order the maximum options, including rear entetainment systems, navigation and so on.

Yes, they made few campaigns against the gray imports, but the best strategy is to provide the competitive prices. Toyota and Porsche have such problems, while BMW, Nissan or Mazda -not. (There is an official distribution of Porsche, Maseratti, Bentley in Ukraine. Mercedes assembles many of their models here. But there is no Lexus. I want to change it ). It is about a market potential.
They just came and are very cautious.
Youy are right absolutely in that! The quality and service standards are required for serving a growing Lexus community in Ukraine and this community wants to pay for the good and professional service. Last year, new Lexuses supplied to the country, made ~30 mln. USD in retail prices -not so small money for a single distributor (and there is many more already used cars from previous years -up to 1997).
It's not about money only - I have rather good business here It's more about passion - sorry for 'nice words'.

I really respect Toyota Company and their products. but I have a humble opinion that going to a more official way it is better for everyone here: Toyota, its customers and its finance statement.

I've had an experience on persuading some rather big US companies to start their business in Ukraine (competely different type of business, though). None of them is unhappy with their decision to come here.

Warm regards,

Yevgen

spwolf

But the problem is that Lexus will not uphold their warranties. So you can not invest a lot of money into making an big luxury dealership, with expensive service center, when you will realistically be sharing profits with another US dealership, paying for a lot bigger transport fees and will not be able to provide customers with warranty. Why would customers go back to your dealership for service where it has to be more expensive because you are using original spare parts, and have big service center with expensive equipment and educated mechanic, if you provide no warranty? They will simply go to their cheap 2-3 man shop and pay 30% less. And you can not compete with them because they invested 10k Euro in your shop while you invested 3 million.

As I said, your only real possibility in creating an sucessful Lexus franchise in your country is going directly with Lexus. Even if you get an partner in the US, once Lexus moves in, they will not want to partner up with you - Toyota sees grey imports as big problem and not partners.

I am an Toyota dealer in Eastern Europe and we constantly enquire about possibility of opening an Lexus dealership in the future.

yevlem

Dear spwolf!
Again, many thanks for your replies. It was interesting to chat with you.

[I somwhow knew that -guessed . I think that you are completely right and you know much better how it is difficult to move a big corporation towards some decision. On the other hand,
A rolling stone gathers no moss. So it is better to keep trying
If you are interested somehow in private discussion or some kind of contact, please write to my private here. What's your country? I'll be absent for few days -going to country.

Thank you again and pleasure to speak with you.

Yevgen

BlkGS3

Malchyat!

LOL

I still think importing Lexus to Ukraine would be a sweet idea even if the warranties will no longer be valid. Look at how many cars are stolen around Europe and brought back to Russia and then purchased. Besides Lexus (toyota) will do just find in the European weather and will be replaced long before a warranty is needed. If you can afford a Lex over there, you can afford another one later

spwolf

yes, but there is an difference - you could have small dealership/service center, something built like used car dealerships in the USA (not luxurious, not glamorous), and sell new/used Lexus's and repair them. However you can not have real Lexus dealership (which means luxury), since you wont be making enough money - your margins will be 5%-6% instead of 12%-13%, and you will have to charge half amount per hour for servicing then if you were official. Also, since warranties dont work, you customers dont have to come back to you for servicing.

Best thing is to talk to Toyota Ukraine and go through them.