Lexus attempting makeover to increase cachet (merged threads)
03-26-07, 04:22 AM
#16
Speaking of wanting to own the LS460, I got to check out the LS460 L today. It had the cool massage and reclining rear seat. Very nice car and lots of cool gadgets. Car looks nice inside and out. However, just like you the car is not for me. These cars keep growing in size and it is too large a car for what I want. I'd stick with the GS model size. I do own an LS right now and may even get a LS430 later but that is pushing it in size for me.
03-26-07, 08:27 AM
#18
03-26-07, 09:38 AM
#20
Good article, it's admirable that Lexus wants to go upscale. As much image as the German marquees have...I question some of the practicality which has made Toyota/Lexus such good cars among this level of buyer. They have a good thing already...
I have business associates who wanted to move their sales upmarket. Only to fail miserably and hurt their an already well devloped reputation in the mid-market segment. Sometimes there is more than just having that everything image. IMO.
Toyota is a smart company so I look forward to what comes.
I have business associates who wanted to move their sales upmarket. Only to fail miserably and hurt their an already well devloped reputation in the mid-market segment. Sometimes there is more than just having that everything image. IMO.
Toyota is a smart company so I look forward to what comes.
03-26-07, 12:10 PM
#21
Lexus Connoisseur
That's definitely a great read. 
03-26-07, 01:12 PM
#22
Really fascinating article...btw apparently the WSJ site has a video of the LS 600h L, but it's subscribers only.
Also, I found a blog posting by a former Team One member, who suggested that some of the elements being used to add cachet to the Lexus brand were employed initially during Lexus' highly successful 1989 launch:
http://daveibsen.typepad.com/5_blogs...everythin.html
I agree that Lexus has cultivated this sensible, less showy brand image, and IMO that will remain. The brand identity though has room to expand at the top end, and the effects will trickle down. I think it's very good they recognize that most people in the luxury market own multiple cars--the Lexus vehicles can complement the Porsche in the garage, etc.
Also, I found a blog posting by a former Team One member, who suggested that some of the elements being used to add cachet to the Lexus brand were employed initially during Lexus' highly successful 1989 launch:
http://daveibsen.typepad.com/5_blogs...everythin.html
Lexus: Everything That's Old Is New Again
I had the privilege of being part of the orginal advertising team that launched Lexus in the United States. As I now watch Lexus remaking itself as an uber-luxury but green-conscious car maker, I can't help but notice how skillfully it is returning to its roots--with the appropriate twist for today's market.
It is hard to imagine (or remember), but in 1989 a Japanese luxury car was considered an oxymoron.
Acura, Infiniti and Lexus were all introduced with a year of eachother with the goal of smashing that image. And more so than its rivals, Lexus not only joined the luxury car party, it conquered it--first by outselling BMW and Mercedes Benz, combined, then by tackling Lincoln and Cadillac in the U.S.
Lexus' position: luxury can be affordable. They tapped into the end of the era of conspicuous consumption. The first LS400 luxury sedan sold for $35,000.
As the '90's rolled on, Lexus loaded up its SUV's and rode that market to great success. Cue "These times, they are 'a changin'" But while they focused on creating a full line of SUV's, they seemed to let the cache of the afforable luxury car alone on the side of the road. The beauty of the LS400 sedan and SC400 coupe disappeared and the cars became boring.
Now, the marketing genious' at Toyota are tapping into an intriguing convergence in the marketplace. Just as the market was ripe back in 1989 to want an affordable car without giving up luxury, Toyota is hoping to jump on the emmissions efficiency bandwagon (i.e. the green-hybrid market) at the same time taking advantage of the uber luxury car rival (just look at the success of Bentley, the "genious" of Jaguar and the expanding product line at Porsche).
Lexus is now introducing a slew of new vehicles costing over $70,000 -- more than anything Lexus has previously sold and nearly twice the price of its best-selling RX sport-utility vehicle. It deployed a "super affluent team," a group that traveled the country asking the ultra-rich what they want. It is throwing lavish parties around the country and cozying up with brands like Vogue Magazine and Neiman Marcus stores.
Rich buyers said they rely more on their peers for advice than third-party groups. So to launch its new LS600h, the luxury hybrid sedan, Lexus is starting a test-drive program in which an influential person in a metro area -- like a Hollywood mogul -- is given the car to drive for a month. When the month is up, that person can choose the next person who gets to have the car for a month.
All this sounds vaguely familiar.
In 1989, the company understood this rich-buyer behavior. We called them "affluentials."--affluent types who could (and would) influence their peers. Lexus launched with a seed program to celebirties (sound familiar?)--offering Hollywood-types and business-moguls free use of Lexus automobiles to help strip-off the "there's no such thing as a Japanese luxury car" image. Lexus spent tens, if not hundreds of millions of dollars sponsoring opera companies, Broadway openings, and concourse d'elgance around the country. They cozied up to brands like Vanity Fair and Cristal Champagne.
What's old is new again.
Lexus will be introducing a LS600h, a hybrid electric luxury sedan with a V8 that performs like a V12 but with the sensibility important to the Al Gore-loving audience that is growing by leaps and bounds.
Susan Sarandon, Julie Roberts, feel free to trade in your Toyota Prius for a luxury hybrid. Come-on, you've got the $100,000+
If you're interested in reading more, jump on over to the Wall Street Journal. While they've got a lot of their history wrong (or forgotten), it is an interesting article, and it has a video of the new luxury hybrid.
I had the privilege of being part of the orginal advertising team that launched Lexus in the United States. As I now watch Lexus remaking itself as an uber-luxury but green-conscious car maker, I can't help but notice how skillfully it is returning to its roots--with the appropriate twist for today's market.
It is hard to imagine (or remember), but in 1989 a Japanese luxury car was considered an oxymoron.
Acura, Infiniti and Lexus were all introduced with a year of eachother with the goal of smashing that image. And more so than its rivals, Lexus not only joined the luxury car party, it conquered it--first by outselling BMW and Mercedes Benz, combined, then by tackling Lincoln and Cadillac in the U.S.
Lexus' position: luxury can be affordable. They tapped into the end of the era of conspicuous consumption. The first LS400 luxury sedan sold for $35,000.
As the '90's rolled on, Lexus loaded up its SUV's and rode that market to great success. Cue "These times, they are 'a changin'" But while they focused on creating a full line of SUV's, they seemed to let the cache of the afforable luxury car alone on the side of the road. The beauty of the LS400 sedan and SC400 coupe disappeared and the cars became boring.
Now, the marketing genious' at Toyota are tapping into an intriguing convergence in the marketplace. Just as the market was ripe back in 1989 to want an affordable car without giving up luxury, Toyota is hoping to jump on the emmissions efficiency bandwagon (i.e. the green-hybrid market) at the same time taking advantage of the uber luxury car rival (just look at the success of Bentley, the "genious" of Jaguar and the expanding product line at Porsche).
Lexus is now introducing a slew of new vehicles costing over $70,000 -- more than anything Lexus has previously sold and nearly twice the price of its best-selling RX sport-utility vehicle. It deployed a "super affluent team," a group that traveled the country asking the ultra-rich what they want. It is throwing lavish parties around the country and cozying up with brands like Vogue Magazine and Neiman Marcus stores.
Rich buyers said they rely more on their peers for advice than third-party groups. So to launch its new LS600h, the luxury hybrid sedan, Lexus is starting a test-drive program in which an influential person in a metro area -- like a Hollywood mogul -- is given the car to drive for a month. When the month is up, that person can choose the next person who gets to have the car for a month.
All this sounds vaguely familiar.
In 1989, the company understood this rich-buyer behavior. We called them "affluentials."--affluent types who could (and would) influence their peers. Lexus launched with a seed program to celebirties (sound familiar?)--offering Hollywood-types and business-moguls free use of Lexus automobiles to help strip-off the "there's no such thing as a Japanese luxury car" image. Lexus spent tens, if not hundreds of millions of dollars sponsoring opera companies, Broadway openings, and concourse d'elgance around the country. They cozied up to brands like Vanity Fair and Cristal Champagne.
What's old is new again.
Lexus will be introducing a LS600h, a hybrid electric luxury sedan with a V8 that performs like a V12 but with the sensibility important to the Al Gore-loving audience that is growing by leaps and bounds.
Susan Sarandon, Julie Roberts, feel free to trade in your Toyota Prius for a luxury hybrid. Come-on, you've got the $100,000+
If you're interested in reading more, jump on over to the Wall Street Journal. While they've got a lot of their history wrong (or forgotten), it is an interesting article, and it has a video of the new luxury hybrid.
03-27-07, 08:57 AM
#23
Guest
Posts: n/a
Great article. As ICEMAN stated, it gives me great confidence that Lexus management is still hungry and still on track.
They do understand this is a LUXURY brand and they continue to go up and sell well, not sell lesser priced cars and say "sales are up".
We are all getting older and incomes go up. Brands want people to stay within the brand.
This is great news.
They do understand this is a LUXURY brand and they continue to go up and sell well, not sell lesser priced cars and say "sales are up".
We are all getting older and incomes go up. Brands want people to stay within the brand.
This is great news.
03-27-07, 10:15 AM
#24
Lexus Image Makeover
The following article appeared in Saturday's Wall Street Journal on how Lexus is trying to win over the super rich and what will be coming in the future. See paper for complete images.
STATUS SEEKER
To Woo Wealthy, Lexus Attempts Image Makeover
It Seeks Luxury Cachet Like Gucci and Prada;$100,000 Sticker Price
By GINA CHON
Wall Street Journal March 24, 2007; Page A1
For years, Toyota Motor Corp.'s Lexus division pitched its cars as the practical alternative to European luxury brands like BMW and Mercedes. And over time, the Lexus brand came to be known as kind of expensive, always respectable -- and a little boring.
1
Audi
The Audi R8 is among the German models in the "prestige luxury" segment Lexus is trying to penetrate.
"Lexus cars are made to be luxurious and forgettable," says Ryan Wilsey, a 29-year-old Boston resident who works in venture capital. Formerly an owner of a Porsche Boxster, Mr. Wilsey's dream cars are a BMW M3 coupe or a Ferrari.
Now, with Toyota's sales hitting new records, it craves a makeover for Lexus. It wants to become a brand associated with the biggest names in luxury. Imagine "Louis Vuitton, Prada, Gucci and Lexus all mentioned in the same breath," says Brian Bolain, a Lexus marketing manager.
To get there, Lexus, a company known for its ultra-conservative culture, is introducing a slew of new vehicles costing over $70,000 -- more than anything Lexus has previously sold and nearly twice the price of its best-selling RX sport-utility vehicle. It deployed a "super affluent team," a group that traveled the country asking the ultra-rich what they want. It is throwing lavish parties around the country and cozying up with brands like Vogue Magazine and Neiman Marcus stores.
The best-selling luxury car brand in the U.S., Lexus is hardly struggling. Sales grew a healthy 7% to 322,000 vehicles last year. The company has no plans to move away from lesser-priced vehicles like the $33,470 ES and the $30,255 IS sedan, which together generate more than a third of the brand's sales. But Lexus, which is sold only in certain foreign markets, still lags well behind the world-wide sales of the BMW and Mercedes brands, which together sold more than 179,000 cars last month alone.
The "prestige luxury" segment, cars priced above $70,000, is a juicy target. Its sales have doubled in the past five years.
But today, the brand lacks the necessary cachet. "For that high-end buyer, we're not on their shopping list," says Bob Carter, head of Lexus's U.S. office.
Marketing, the lifeblood of a luxury brand, isn't a traditional strength for Lexus, which is known more for reliability and customer service. History shows it can be very difficult to change consumer perceptions of a car brand. And luxury buyers, usually older, could be even more stubborn, as they are often highly loyal to the kinds of cars they've previously owned.
WSJ's Gina Chon talks about some of the new features of the forthcoming Lexus LS V8 hybrid, which is expected to top $100,000.
Lexus's somewhat nerdy image dates back to its very beginnings in 1989. While Mercedes and BMW threw lavish parties to herald the launch a new model, Lexus's dealers offered free wine and cheese. The European rivals run ads in exotic locales stressing excitement and performance. Lexus's campaigns focus on specific technological features, like rotating headlamps.
One big challenge: high-end luxury cars traditionally target men. They represent 60% of Mercedes buyers and 58% of BMW buyers. But 51% of Lexus's buyers are female, a statistic that mirrors the proportion of women in the overall car market.
Lexus started its new push in 2005 when it assembled the super-affluent team -- nine Lexus employees from various departments including marketing and finance. The team interviewed car buyers who had at least $5 million in assets (excluding their primary residence) and who had previously owned a few luxury vehicles. More than half of the interviewees selected were men.
For the next two years, the team crisscrossed the country, asking 100 ultra-wealthy people such questions as "Why do you live where you live?" and "What do you do for enjoyment?" "We asked ourselves and these people a lot of questions," says team leader and marketing chief Deborah Wahl Meyer.
Owning Fleets
One of the team's early realizations was that the ultra-rich don't have a car. They have fleets of them, often scattered at different homes and vacation spots across the country. And not only did the rich have a lot of cars, some at the team were surprised by how often many buyers changed their fleet, trading cars more often than most people change wardrobes. Some changed cars in three months, either because they changed their minds or wanted the newest model.
That discovery led Lexus to realize that it didn't necessarily have to compete with other ultra-luxury brands as much as complement them. A Lexus sedan may not be as chic as Porsche 911 convertible, but it might be added as the practical daily driver for someone who already has one. Indeed, the team also found that many of the ultra-rich didn't act all that differently from regular Lexus owners, identifying themselves as "upper middle class" and shopping at places like Costco, Home Depot and Target.
New Hybrid
For those Costco runs -- and for a bit of Saturday night showing off -- Lexus this summer is launching the LS600h, a hybrid electric luxury sedan intended to combine the performance of a 12-cylinder engine with the promise of better fuel economy. The price tops $100,000.
The team found that ultra-wealthy buyers also like unique experiences inaccessible to the general public. So Lexus tripled the number of events it holds. Last August, it hosted a fashion show with Vogue at a vintage car show in California. It's offering 100 special-edition vehicles to big-ticket customers of retailers Neiman Marcus and Bergdorf Goodman.
To celebrate the redesigned top-of-the-line LS sedan, launched last fall, Lexus dealers threw parties on a grand scale. Two Arizona dealers hosted acrobats from Cirque du Soleil for a private performance. A Texas dealership celebrated with the legendary Motown group the Temptations, caviar, and champagne. In all, 182 of Lexus's 221 dealers had elaborate parties, many of which cost in the six figures, as opposed to the several thousands of dollars that were spent before.
Rich buyers said they rely more on their peers for advice than third-party groups. So to launch its new LS600h, the luxury hybrid sedan, Lexus is starting a test-drive program in which an influential person in a metro area -- like a Hollywood mogul -- is given the car to drive for a month. When the month is up, that person can choose the next person who gets to have the car for a month.
Quality of Service
The Lexus team says they were surprised by quality of service some super-luxury car buyers experience. "A Ferrari owner said when he takes a car in, he expects to be called and told what is going to be done to it, have it done and that's it. People who have Rolls Royces and Bentleys said the same thing," says Mr. Bolain. "But some of these people say they weren't getting that kind of service." The three car makers all say they offer impeccable service.
Lexus created four new "brand-experience manager" positions for each of its regions in the U.S. to answer queries and guide dealers on efforts like launch parties. That's a big deal for Lexus, a company so intent on avoiding waste that employees there joke it takes "an act of God" to add even one person to the staff.
To attract men to the brand, Lexus -- long known more for cushy comfort than pulse-racing performance -- is plunging into the sports-car arena in 2008, launching a souped-up high-performance series similar to Mercedes's AMG series and BMW's M models. And later this year, Lexus will announce production details of its "super Lexus" with more than 500 horsepower.
Long Haul
U.S. car makers, which have spent years trying to lure consumers away from the Japanese, learned the hard way how difficult it can be to change perceptions of a brand. It's "a long-term process," says Francisco Codina, a sales and marketing executive at Ford Motor Co.
Luxury buyers may be even more resistant. Other car makers have also found it a challenge to sway buyers from Mercedes and BMW. "If you've always bought a BMW and love BMW, why would you switch to another brand?" explains Jim Taylor, head of General Motors Corp.'s Cadillac division.
At a Lexus focus group session held at the Avalon Hotel in Beverly Hills, one 50-year-old advertising executive said he questioned whether he should give up the cachet of owning a Mercedes for a Lexus, even though he thought Lexus was a better-quality car. "My perception is that (Lexus) developed more for utility, to be a good sound car, than to deliver on style," said a 46-year-old entrepreneur who participated in a research session.
Still, Lexus's effort comes at a time when the European car makers may be losing the exclusivity that made them so desirable in the first place. By subsidizing monthly lease payments and other types of financial engineering, luxury car makers that once catered only to the truly rich have been able to dramatically expand their customer base.
In Orange County, Mercedes has almost three times the market share of Chrysler and around the same market share as Nissan, according to R.L. Polk & Co. And BMW is widely expected to launch the first car below the $30,000 price barrier when it brings its small 1-series hatchback here next year.
Donna Boland, a spokeswoman for DaimlerChrysler AG's Mercedes-Benz division, says the company's broad range of prices is a positive attribute, with different models serving different luxury customers' needs. Tom Purves, head of BMW AG's U.S. sales office, says high-end customers do want more exclusivity, but says an owner of a $121,400 sedan won't resent a 25-year-old with a much cheaper model.
There's been encouraging early response for Lexus at its newly built $75 million Newport, Calif. dealership, where visitors can practice their golf swing at the putting green or play arcade games. Allen Moznett, the dealer's general manager, says there's a waiting list for the new longer LS sedan, which can go for over $83,000.
Chris Hummel, a vice president at software maker Oracle Corp. recently bought a $140,000 Mercedes. Yet he's already seen about five others driving his pricey Mercedes in the San Francisco Bay area where he lives.
"Lexus doesn't play in that [price range] so they don't have credibility there," he says. "But given its reputation for customer service, I would jump all over it if they went there."
STATUS SEEKER
To Woo Wealthy, Lexus Attempts Image Makeover
It Seeks Luxury Cachet Like Gucci and Prada;$100,000 Sticker Price
By GINA CHON
Wall Street Journal March 24, 2007; Page A1
For years, Toyota Motor Corp.'s Lexus division pitched its cars as the practical alternative to European luxury brands like BMW and Mercedes. And over time, the Lexus brand came to be known as kind of expensive, always respectable -- and a little boring.
1
Audi
The Audi R8 is among the German models in the "prestige luxury" segment Lexus is trying to penetrate.
"Lexus cars are made to be luxurious and forgettable," says Ryan Wilsey, a 29-year-old Boston resident who works in venture capital. Formerly an owner of a Porsche Boxster, Mr. Wilsey's dream cars are a BMW M3 coupe or a Ferrari.
Now, with Toyota's sales hitting new records, it craves a makeover for Lexus. It wants to become a brand associated with the biggest names in luxury. Imagine "Louis Vuitton, Prada, Gucci and Lexus all mentioned in the same breath," says Brian Bolain, a Lexus marketing manager.
To get there, Lexus, a company known for its ultra-conservative culture, is introducing a slew of new vehicles costing over $70,000 -- more than anything Lexus has previously sold and nearly twice the price of its best-selling RX sport-utility vehicle. It deployed a "super affluent team," a group that traveled the country asking the ultra-rich what they want. It is throwing lavish parties around the country and cozying up with brands like Vogue Magazine and Neiman Marcus stores.
The best-selling luxury car brand in the U.S., Lexus is hardly struggling. Sales grew a healthy 7% to 322,000 vehicles last year. The company has no plans to move away from lesser-priced vehicles like the $33,470 ES and the $30,255 IS sedan, which together generate more than a third of the brand's sales. But Lexus, which is sold only in certain foreign markets, still lags well behind the world-wide sales of the BMW and Mercedes brands, which together sold more than 179,000 cars last month alone.
The "prestige luxury" segment, cars priced above $70,000, is a juicy target. Its sales have doubled in the past five years.
But today, the brand lacks the necessary cachet. "For that high-end buyer, we're not on their shopping list," says Bob Carter, head of Lexus's U.S. office.
Marketing, the lifeblood of a luxury brand, isn't a traditional strength for Lexus, which is known more for reliability and customer service. History shows it can be very difficult to change consumer perceptions of a car brand. And luxury buyers, usually older, could be even more stubborn, as they are often highly loyal to the kinds of cars they've previously owned.
WSJ's Gina Chon talks about some of the new features of the forthcoming Lexus LS V8 hybrid, which is expected to top $100,000.
Lexus's somewhat nerdy image dates back to its very beginnings in 1989. While Mercedes and BMW threw lavish parties to herald the launch a new model, Lexus's dealers offered free wine and cheese. The European rivals run ads in exotic locales stressing excitement and performance. Lexus's campaigns focus on specific technological features, like rotating headlamps.
One big challenge: high-end luxury cars traditionally target men. They represent 60% of Mercedes buyers and 58% of BMW buyers. But 51% of Lexus's buyers are female, a statistic that mirrors the proportion of women in the overall car market.
Lexus started its new push in 2005 when it assembled the super-affluent team -- nine Lexus employees from various departments including marketing and finance. The team interviewed car buyers who had at least $5 million in assets (excluding their primary residence) and who had previously owned a few luxury vehicles. More than half of the interviewees selected were men.
For the next two years, the team crisscrossed the country, asking 100 ultra-wealthy people such questions as "Why do you live where you live?" and "What do you do for enjoyment?" "We asked ourselves and these people a lot of questions," says team leader and marketing chief Deborah Wahl Meyer.
Owning Fleets
One of the team's early realizations was that the ultra-rich don't have a car. They have fleets of them, often scattered at different homes and vacation spots across the country. And not only did the rich have a lot of cars, some at the team were surprised by how often many buyers changed their fleet, trading cars more often than most people change wardrobes. Some changed cars in three months, either because they changed their minds or wanted the newest model.
That discovery led Lexus to realize that it didn't necessarily have to compete with other ultra-luxury brands as much as complement them. A Lexus sedan may not be as chic as Porsche 911 convertible, but it might be added as the practical daily driver for someone who already has one. Indeed, the team also found that many of the ultra-rich didn't act all that differently from regular Lexus owners, identifying themselves as "upper middle class" and shopping at places like Costco, Home Depot and Target.
New Hybrid
For those Costco runs -- and for a bit of Saturday night showing off -- Lexus this summer is launching the LS600h, a hybrid electric luxury sedan intended to combine the performance of a 12-cylinder engine with the promise of better fuel economy. The price tops $100,000.
The team found that ultra-wealthy buyers also like unique experiences inaccessible to the general public. So Lexus tripled the number of events it holds. Last August, it hosted a fashion show with Vogue at a vintage car show in California. It's offering 100 special-edition vehicles to big-ticket customers of retailers Neiman Marcus and Bergdorf Goodman.
To celebrate the redesigned top-of-the-line LS sedan, launched last fall, Lexus dealers threw parties on a grand scale. Two Arizona dealers hosted acrobats from Cirque du Soleil for a private performance. A Texas dealership celebrated with the legendary Motown group the Temptations, caviar, and champagne. In all, 182 of Lexus's 221 dealers had elaborate parties, many of which cost in the six figures, as opposed to the several thousands of dollars that were spent before.
Rich buyers said they rely more on their peers for advice than third-party groups. So to launch its new LS600h, the luxury hybrid sedan, Lexus is starting a test-drive program in which an influential person in a metro area -- like a Hollywood mogul -- is given the car to drive for a month. When the month is up, that person can choose the next person who gets to have the car for a month.
Quality of Service
The Lexus team says they were surprised by quality of service some super-luxury car buyers experience. "A Ferrari owner said when he takes a car in, he expects to be called and told what is going to be done to it, have it done and that's it. People who have Rolls Royces and Bentleys said the same thing," says Mr. Bolain. "But some of these people say they weren't getting that kind of service." The three car makers all say they offer impeccable service.
Lexus created four new "brand-experience manager" positions for each of its regions in the U.S. to answer queries and guide dealers on efforts like launch parties. That's a big deal for Lexus, a company so intent on avoiding waste that employees there joke it takes "an act of God" to add even one person to the staff.
To attract men to the brand, Lexus -- long known more for cushy comfort than pulse-racing performance -- is plunging into the sports-car arena in 2008, launching a souped-up high-performance series similar to Mercedes's AMG series and BMW's M models. And later this year, Lexus will announce production details of its "super Lexus" with more than 500 horsepower.
Long Haul
U.S. car makers, which have spent years trying to lure consumers away from the Japanese, learned the hard way how difficult it can be to change perceptions of a brand. It's "a long-term process," says Francisco Codina, a sales and marketing executive at Ford Motor Co.
Luxury buyers may be even more resistant. Other car makers have also found it a challenge to sway buyers from Mercedes and BMW. "If you've always bought a BMW and love BMW, why would you switch to another brand?" explains Jim Taylor, head of General Motors Corp.'s Cadillac division.
At a Lexus focus group session held at the Avalon Hotel in Beverly Hills, one 50-year-old advertising executive said he questioned whether he should give up the cachet of owning a Mercedes for a Lexus, even though he thought Lexus was a better-quality car. "My perception is that (Lexus) developed more for utility, to be a good sound car, than to deliver on style," said a 46-year-old entrepreneur who participated in a research session.
Still, Lexus's effort comes at a time when the European car makers may be losing the exclusivity that made them so desirable in the first place. By subsidizing monthly lease payments and other types of financial engineering, luxury car makers that once catered only to the truly rich have been able to dramatically expand their customer base.
In Orange County, Mercedes has almost three times the market share of Chrysler and around the same market share as Nissan, according to R.L. Polk & Co. And BMW is widely expected to launch the first car below the $30,000 price barrier when it brings its small 1-series hatchback here next year.
Donna Boland, a spokeswoman for DaimlerChrysler AG's Mercedes-Benz division, says the company's broad range of prices is a positive attribute, with different models serving different luxury customers' needs. Tom Purves, head of BMW AG's U.S. sales office, says high-end customers do want more exclusivity, but says an owner of a $121,400 sedan won't resent a 25-year-old with a much cheaper model.
There's been encouraging early response for Lexus at its newly built $75 million Newport, Calif. dealership, where visitors can practice their golf swing at the putting green or play arcade games. Allen Moznett, the dealer's general manager, says there's a waiting list for the new longer LS sedan, which can go for over $83,000.
Chris Hummel, a vice president at software maker Oracle Corp. recently bought a $140,000 Mercedes. Yet he's already seen about five others driving his pricey Mercedes in the San Francisco Bay area where he lives.
"Lexus doesn't play in that [price range] so they don't have credibility there," he says. "But given its reputation for customer service, I would jump all over it if they went there."
03-27-07, 06:49 PM
#27
I see an inconsistency in their reasoning. They want "to become a brand associated with the biggest names in luxury." And "to get there, Lexus, a company known for its ultra-conservative culture, is introducing a slew of new vehicles costing over $70,000". OK, that part of the strategy makes sense.
However, the high-end market is mostly men. "One big challenge: high-end luxury cars traditionally target men. They represent 60% of Mercedes buyers and 58% of BMW buyers. But 51% of Lexus's buyers are female..." Well what attracts men (aside from a beautiful woman) is performance. The HP boost this year is a start, but a sport suspension should have been available from the start in all models. Additionally, an optional high output engine should be available, something either turbocharged or of greater displacement, offering at least another 50-100 HP. I'm not a fan of aerodynamic body kits, but it should be an option.
Well, as they say, Rome wasn't built in a day.
However, the high-end market is mostly men. "One big challenge: high-end luxury cars traditionally target men. They represent 60% of Mercedes buyers and 58% of BMW buyers. But 51% of Lexus's buyers are female..." Well what attracts men (aside from a beautiful woman) is performance. The HP boost this year is a start, but a sport suspension should have been available from the start in all models. Additionally, an optional high output engine should be available, something either turbocharged or of greater displacement, offering at least another 50-100 HP. I'm not a fan of aerodynamic body kits, but it should be an option.
Well, as they say, Rome wasn't built in a day.
03-27-07, 07:08 PM
#29
Lexus Test Driver
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Speaking of wanting to own the LS460, I got to check out the LS460 L today. It had the cool massage and reclining rear seat. Very nice car and lots of cool gadgets. Car looks nice inside and out. However, just like you the car is not for me. These cars keep growing in size and it is too large a car for what I want. I'd stick with the GS model size. I do own an LS right now and may even get a LS430 later but that is pushing it in size for me.