Lexus sales in Japan so far???
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It would be nice if someone to give me a run down how Lexus is doing as brand in Japan so far. And if there is any improvement from the initial launch.
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Yes, there has been significant improvement, driven largely by the LS 460, which is now one of the best-selling luxury sedans in Japan, and is beating most of the import luxury cars in numbers so far. However, while the trend is good there are still many months of the year...
2006-2007 Lexus Japan sales
November 5,063 +43.0%
December 3,760 +170.6%
January 4,123 +216.5%
February 3,364 +236.1%
March 4,003 +73.0%
Current Lexus monthly target is 3,000 units per month (Japan Alpha article), so Lexus is outperforming those estimates; however this number is largely due to the high demand for the LS 460, which attracted 12,000+ preorders at its September 2006 debut (9x expectations of 1,300/mo), and is still selling strongly.
Most of the 160+ Lexus dealerships in Japan are now in the black, according to Ward's Dealer.
1. Lexus went on sale with the SC, GS, and IS in August 2005, with a 5-month target of 20,000; only 10,300 units were sold according to BusinessWeek:
http://www.businessweek.com/autos/co...tm?chan=search
2. As a result, the 2006 full-year target of 50-60,000 was lowered. Based on the Ward's Dealer article, "Sales during the first 12 months, factoring for a staggered launch of three models in August and September 2005, totaled nearly 27,000 units – 25% below target. Meanwhile, plans to boost sales to 60,000 in 2008 and 100,000 after 2010 have been put on hold. Yasuhiko Yokoi, managing officer in charge of Toyota’s Lexus marketing division, admits initial sales targets were too ambitious."
http://wardsdealer.com/latest/lexus_progressing_japan/
3. The Ward's Dealer article (Dec 2006) states a 2007 target of 51,000 units...
The BusinessWeek article (Feb 2006) states an expected 2006 number of 40,000 units...
The Japan Alpha article (Mar 2006) states a monthly goal of 3,000 units:
http://japan.seekingalpha.com/article/7324
At the current 2007 year pace, with an average of 3,830 units a month, Lexus is on track in Japan to achieve around 45,960 units, which would be close to their goal for the 2007 year. It depends on how the sales trend shapes up. The Ward's Dealer article suggests high expectations for the LS 600h, which could sell 200 units a month?!
Sales data:
March: http://www.fxstreet.com/news/forex-n...a-a2800f0a83e4
February: http://www.automotiveworld.com/WVMA/...ontentid=58999
January: http://www.japaneconomynews.com/2007...es-down-again/
2006-2007 Lexus Japan sales
November 5,063 +43.0%
December 3,760 +170.6%
January 4,123 +216.5%
February 3,364 +236.1%
March 4,003 +73.0%
Current Lexus monthly target is 3,000 units per month (Japan Alpha article), so Lexus is outperforming those estimates; however this number is largely due to the high demand for the LS 460, which attracted 12,000+ preorders at its September 2006 debut (9x expectations of 1,300/mo), and is still selling strongly.
Most of the 160+ Lexus dealerships in Japan are now in the black, according to Ward's Dealer.
1. Lexus went on sale with the SC, GS, and IS in August 2005, with a 5-month target of 20,000; only 10,300 units were sold according to BusinessWeek:
http://www.businessweek.com/autos/co...tm?chan=search
2. As a result, the 2006 full-year target of 50-60,000 was lowered. Based on the Ward's Dealer article, "Sales during the first 12 months, factoring for a staggered launch of three models in August and September 2005, totaled nearly 27,000 units – 25% below target. Meanwhile, plans to boost sales to 60,000 in 2008 and 100,000 after 2010 have been put on hold. Yasuhiko Yokoi, managing officer in charge of Toyota’s Lexus marketing division, admits initial sales targets were too ambitious."
http://wardsdealer.com/latest/lexus_progressing_japan/
3. The Ward's Dealer article (Dec 2006) states a 2007 target of 51,000 units...
The BusinessWeek article (Feb 2006) states an expected 2006 number of 40,000 units...
The Japan Alpha article (Mar 2006) states a monthly goal of 3,000 units:
http://japan.seekingalpha.com/article/7324
At the current 2007 year pace, with an average of 3,830 units a month, Lexus is on track in Japan to achieve around 45,960 units, which would be close to their goal for the 2007 year. It depends on how the sales trend shapes up. The Ward's Dealer article suggests high expectations for the LS 600h, which could sell 200 units a month?!
Sales data:
March: http://www.fxstreet.com/news/forex-n...a-a2800f0a83e4
February: http://www.automotiveworld.com/WVMA/...ontentid=58999
January: http://www.japaneconomynews.com/2007...es-down-again/
Last edited by encore888; 04-17-07 at 01:53 AM.
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Great looking out enigma88! Its good to see Lexus doing well in Japan, as oppose to what German fanboys say. I'm disappointed that the GS and IS isn't selling as much as they should. I wonder what would Lexus have to do in order for these two vehicles to start selling.
It's good to see Lexus doing great in the US, but they have to handle their home territory first. Maybe in the upcoming next-gen cars, it would spark more interest into the vehicles. After Lexus takes over Japan, we will take over Europe....
It's good to see Lexus doing great in the US, but they have to handle their home territory first. Maybe in the upcoming next-gen cars, it would spark more interest into the vehicles. After Lexus takes over Japan, we will take over Europe....
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Thanks, that's a good collection of articles.
The Lexus brand will do great in Japan when they differentiate more between Lexus & Toyota models in the next generation.
As noted in the article, above the price cut-off point (~US$35k)of what is considered the luxury segment there, the Toyota brand is already selling more than Lexus + BMW + Mercedes brands combined. Their numbers will look great if they introduce the next generation of RX/GX/LX as Lexus models.
Not sure what they will do to the future Toyota Crown's though, as they are currently priced in the same range as the Lexus IS/GS & can be as/more luxuriously equipped.
The Lexus brand will do great in Japan when they differentiate more between Lexus & Toyota models in the next generation.
As noted in the article, above the price cut-off point (~US$35k)of what is considered the luxury segment there, the Toyota brand is already selling more than Lexus + BMW + Mercedes brands combined. Their numbers will look great if they introduce the next generation of RX/GX/LX as Lexus models.
Not sure what they will do to the future Toyota Crown's though, as they are currently priced in the same range as the Lexus IS/GS & can be as/more luxuriously equipped.
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The Crown has a big reputation in Japan, so they definitely won't get rid of it. I expect the new GS to really go upmarket, and I expect the new LS to continue to go upmarket, further differentiating between the Crown series.
Once the IS-F and LF-A come out, Lexus' image and sales will go even higher.
Once the IS-F and LF-A come out, Lexus' image and sales will go even higher.
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You're welcome guys. One good sign is that the dealerships are profitable now. According to past reports, middle of last year most were all still in the red. Clearly that has turned around. And for the forecasters who said that the lack of a flagship was a reason for slow early sales, they seemed to be right. Lexus USA launched with the LS 400. Now Lexus Japan has seen sales rise because of the debut of the LS 460.
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I think Lexus Japan wants to position the new LS as the Toyota group's most prestigious vehicle series that they've ever made (as they want to replace the V12 Century).
In all seriousness, I can't wait for the LS 600 Hybrid LWB to launch there. I think that's gonna put it as the "cleanest flagship vehicle in the streets of Japan."
In all seriousness, I can't wait for the LS 600 Hybrid LWB to launch there. I think that's gonna put it as the "cleanest flagship vehicle in the streets of Japan."
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Originally Posted by LA TIMES
Copyright 2006 Los Angeles Times
All Rights Reserved
Los Angeles Times
November 15, 2006 Wednesday
Home Edition
SECTION: BUSINESS; Business Desk; Part C; Pg. 1
LENGTH: 1203 words
HEADLINE: In Japan, a Lexus just doesn't have that cachet;
Despite its popularity in the U.S., the Toyota brand faces skeptical consumers at home.
BYLINE: Bruce Wallace, Times Staff Writer
DATELINE: TOKYO
BODY:
These days no one scoffs at Toyota Motor Corp., the world's most profitable auto manufacturer with an apparently fine-tuned sense of what drivers want.
So it may be hard to recall the skepticism in the 1980s when this Japanese company, known then for engineering dependable cars at affordable prices, announced plans to crash the luxury car club controlled by iconic names such as Mercedes, BMW and Cadillac.
Today, Toyota's luxury Lexus sedans, coupes and sport utility vehicles are clogging country club parking lots across America.
Lexus has been the bestselling luxury car in the U.S. for the last six years. Its quiet ride and sleek style give middlebrow Toyota something to appeal to the driver who covets bells and whistles such as an eight-speed automatic transmission, seats that give massages and 19 -- yes, 19! -- surround-sound speakers.
Yet in Japan, most luxury car buyers have eyeballed the Lexus, kicked its tires and said, "Give me something European."
Germany's Mercedes and BMW are still the luxury cars of choice in Japan. Mercedes, owned by DaimlerChrysler, sold more than 58,000 cars in Japan last year; BMW has delivered 38,400 in the first 10 months of 2006.
Japan may not be the world's biggest market for premium cars, but it's one with growing demand and a consumer thirst for the extras that make for healthy profits.
When Lexus made its debut in Japan in September last year, Toyota executives said they expected to sell 50,000 to 60,000 vehicles in the first year. They have sold just half that after more than 14 months on the market.
"The reality is that, ironically for Toyota, Japan is proving to be a difficult market," said Christopher Richter, an auto industry analyst at CLSA Asia Pacific in Tokyo. "Their difficulty here is that there is greater panache in owning a Mercedes or a BMW. In the U.S., the Lexus is a sensible reward for personal success.
"But in Japan, people want something that says, 'Hey, I spent stupid money on a car.' "
Getting that kind of reaction with a Lexus is difficult in Japan, where the name still means Toyota and doesn't generate much of a \o7frisson\f7. Unlike in the U.S., where Toyota established Lexus as an independent premium brand, Lexus models sold in Japan were all previously marketed as Toyotas: the Altezza, the Aristo, the Soarer and the Celsior.
"Lexus models are just changed models of Toyota cars that didn't sell well in Japan," said Makiteru Ishikawa, an auto industry journalist and a panelist who helps select the prestigious Japan Car of the Year.
He said Toyota's corporate culture remained too focused on high volumes, failing to understand that premium cars must be exclusive, not just expensive.
Toyota executives acknowledge that the launch has been slower than hoped.
"We don't know why they are a little more cautious about buying Japanese for luxury," said Paul Nolasco, a Toyota spokesman in Tokyo. The problem is not that no one knows the Lexus name, he said.
Toyota's research surveys put Lexus brand awareness at 84% of potential car buyers, about 10 percentage points below BMW and Mercedes but still a high level of penetration.
The problem is that Lexus is far behind Mercedes when respondents were asked whether the car represented luxury (though it polled roughly the same as BMW in that category).
Japan is a fiercely competitive playing field for the world's biggest brands. Luxury items such as handbags and jewelry prospered even during Japan's prolonged recession of the 1990s.
Last spring, Louis Vuitton chose Tokyo to host the first ready-to-wear catwalk show outside of Paris. Gucci just opened a flagship store in Tokyo's pricey Ginza district. But Japanese consumers seem reluctant to put Lexus in this rarified category.
"I know the mechanics of Japanese cars are excellent, but to me, the outside looks are similar to every other Japanese car," said Emi Bamba, 57, who has been driving a Mercedes for the last 20 years.
She drove a Cadillac before that after she saw how easily her Japanese Mazda was crushed in a traffic accident. "Japanese cars don't make any impact on me," Bamba said.
That failure is clearly galling to Toyota, which is accustomed to generating mostly happy corporate news. Toyota is not just the world's most profitable auto manufacturer. It is in the passing lane preparing to overtake General Motors Corp. as the world's largest seller of cars.
With its pioneering hybrid cars, Toyota continues to swipe market share from Detroit's automakers and saw its profit soar to $3.44 billion in the last fiscal quarter alone.
Toyota's Nolasco said the news wasn't all bad. Sales of Lexus' IS and GS sedan series have captured nearly one-third of the market against the Mercedes and BMW brands they compete against, he said. And in September, Toyota added the LS460 to the lineup, selling 12,000 of its most extravagant model so far.
Toyota's competitors aren't about to gloat -- publicly, at least.
"A Lexus is essentially a Toyota in the minds of Japanese consumers, and Toyota focused for decades on serving a mass market, so the Japanese see Toyotas as a mass product," said Yuchiro Ito, a spokesman for BMW Japan. "But Toyota is extremely serious about developing a serious product, and once they have put the Lexus models through a full cycle of changes, the real battle will begin."
Other observers point to wider problems in the world's second-largest car market. Sales of regular passenger vehicles are declining in Japan, a worrying trend that may be hard to reverse as long as the country's population continues to shrink.
The domestic auto industry is being sustained mostly by an unexpected boom in minis: small passenger vehicles that weigh about half a normal passenger car and are on average 40% more fuel efficient. Japanese manufacturers sold more than 1 million minis in the first half of 2006.
Some see this development as a sign of a new caution among Japanese consumers, a search for value and performance that may play to Lexus' strengths.
"The people buying Lexus now tend to be small company owners who live in small towns," said auto journalist Ishikawa, who says most Lexus drivers are over 40. "They don't want to be regarded as rich or rumored to have made money by doing something wrong. And small company presidents whose businesses deal with Toyota only buy Toyota cars, even if they have the money to buy Mercedes or BMW."
Nolasco said Toyota could generate buzz for the Lexus with changes in design and styling. And the Lexus LS460 has features aimed at anticipating the needs of drivers and passengers, such as infrared sensors that read body temperatures and then provide each rider with individually attuned climate control.
But critics like Ishikawa say Toyota needs to think about the driving experience. He drove the LS460 and found it flawless. "It ran fast, powerful and safe," he said. But there was a deficit in the pizazz department.
"There is no characteristic that brings pleasure in owning it or a feeling that it is fun to drive," he said. "If cars can be said to represent the national culture, then Toyota Lexus is the car that represents Japan.
"It is a straight-A student."
bruce.wallace@latimes.com
Naoko Nishiwaki of The Times' Tokyo bureau contributed to this report.
GRAPHIC: PHOTO: ROUGH ROAD: When Toyota debuted the Lexus in its domestic market, it expected to sell 50,000 to 60,000 vehicles in the first year. After more than 14 months on the market, only half that number have been sold. Above, a Lexus at an assembly plant in Miyata, Japan. PHOTOGRAPHER: Ken Shimizu AFP/Getty Images PHOTO: LAUNCH: Toyota President Katsuaki Watanabe unveils the LS460 in Tokyo in September. PHOTOGRAPHER: Koichi Kamoshida Getty Images
LOAD-DATE: November 15, 2006
All Rights Reserved
Los Angeles Times
November 15, 2006 Wednesday
Home Edition
SECTION: BUSINESS; Business Desk; Part C; Pg. 1
LENGTH: 1203 words
HEADLINE: In Japan, a Lexus just doesn't have that cachet;
Despite its popularity in the U.S., the Toyota brand faces skeptical consumers at home.
BYLINE: Bruce Wallace, Times Staff Writer
DATELINE: TOKYO
BODY:
These days no one scoffs at Toyota Motor Corp., the world's most profitable auto manufacturer with an apparently fine-tuned sense of what drivers want.
So it may be hard to recall the skepticism in the 1980s when this Japanese company, known then for engineering dependable cars at affordable prices, announced plans to crash the luxury car club controlled by iconic names such as Mercedes, BMW and Cadillac.
Today, Toyota's luxury Lexus sedans, coupes and sport utility vehicles are clogging country club parking lots across America.
Lexus has been the bestselling luxury car in the U.S. for the last six years. Its quiet ride and sleek style give middlebrow Toyota something to appeal to the driver who covets bells and whistles such as an eight-speed automatic transmission, seats that give massages and 19 -- yes, 19! -- surround-sound speakers.
Yet in Japan, most luxury car buyers have eyeballed the Lexus, kicked its tires and said, "Give me something European."
Germany's Mercedes and BMW are still the luxury cars of choice in Japan. Mercedes, owned by DaimlerChrysler, sold more than 58,000 cars in Japan last year; BMW has delivered 38,400 in the first 10 months of 2006.
Japan may not be the world's biggest market for premium cars, but it's one with growing demand and a consumer thirst for the extras that make for healthy profits.
When Lexus made its debut in Japan in September last year, Toyota executives said they expected to sell 50,000 to 60,000 vehicles in the first year. They have sold just half that after more than 14 months on the market.
"The reality is that, ironically for Toyota, Japan is proving to be a difficult market," said Christopher Richter, an auto industry analyst at CLSA Asia Pacific in Tokyo. "Their difficulty here is that there is greater panache in owning a Mercedes or a BMW. In the U.S., the Lexus is a sensible reward for personal success.
"But in Japan, people want something that says, 'Hey, I spent stupid money on a car.' "
Getting that kind of reaction with a Lexus is difficult in Japan, where the name still means Toyota and doesn't generate much of a \o7frisson\f7. Unlike in the U.S., where Toyota established Lexus as an independent premium brand, Lexus models sold in Japan were all previously marketed as Toyotas: the Altezza, the Aristo, the Soarer and the Celsior.
"Lexus models are just changed models of Toyota cars that didn't sell well in Japan," said Makiteru Ishikawa, an auto industry journalist and a panelist who helps select the prestigious Japan Car of the Year.
He said Toyota's corporate culture remained too focused on high volumes, failing to understand that premium cars must be exclusive, not just expensive.
Toyota executives acknowledge that the launch has been slower than hoped.
"We don't know why they are a little more cautious about buying Japanese for luxury," said Paul Nolasco, a Toyota spokesman in Tokyo. The problem is not that no one knows the Lexus name, he said.
Toyota's research surveys put Lexus brand awareness at 84% of potential car buyers, about 10 percentage points below BMW and Mercedes but still a high level of penetration.
The problem is that Lexus is far behind Mercedes when respondents were asked whether the car represented luxury (though it polled roughly the same as BMW in that category).
Japan is a fiercely competitive playing field for the world's biggest brands. Luxury items such as handbags and jewelry prospered even during Japan's prolonged recession of the 1990s.
Last spring, Louis Vuitton chose Tokyo to host the first ready-to-wear catwalk show outside of Paris. Gucci just opened a flagship store in Tokyo's pricey Ginza district. But Japanese consumers seem reluctant to put Lexus in this rarified category.
"I know the mechanics of Japanese cars are excellent, but to me, the outside looks are similar to every other Japanese car," said Emi Bamba, 57, who has been driving a Mercedes for the last 20 years.
She drove a Cadillac before that after she saw how easily her Japanese Mazda was crushed in a traffic accident. "Japanese cars don't make any impact on me," Bamba said.
That failure is clearly galling to Toyota, which is accustomed to generating mostly happy corporate news. Toyota is not just the world's most profitable auto manufacturer. It is in the passing lane preparing to overtake General Motors Corp. as the world's largest seller of cars.
With its pioneering hybrid cars, Toyota continues to swipe market share from Detroit's automakers and saw its profit soar to $3.44 billion in the last fiscal quarter alone.
Toyota's Nolasco said the news wasn't all bad. Sales of Lexus' IS and GS sedan series have captured nearly one-third of the market against the Mercedes and BMW brands they compete against, he said. And in September, Toyota added the LS460 to the lineup, selling 12,000 of its most extravagant model so far.
Toyota's competitors aren't about to gloat -- publicly, at least.
"A Lexus is essentially a Toyota in the minds of Japanese consumers, and Toyota focused for decades on serving a mass market, so the Japanese see Toyotas as a mass product," said Yuchiro Ito, a spokesman for BMW Japan. "But Toyota is extremely serious about developing a serious product, and once they have put the Lexus models through a full cycle of changes, the real battle will begin."
Other observers point to wider problems in the world's second-largest car market. Sales of regular passenger vehicles are declining in Japan, a worrying trend that may be hard to reverse as long as the country's population continues to shrink.
The domestic auto industry is being sustained mostly by an unexpected boom in minis: small passenger vehicles that weigh about half a normal passenger car and are on average 40% more fuel efficient. Japanese manufacturers sold more than 1 million minis in the first half of 2006.
Some see this development as a sign of a new caution among Japanese consumers, a search for value and performance that may play to Lexus' strengths.
"The people buying Lexus now tend to be small company owners who live in small towns," said auto journalist Ishikawa, who says most Lexus drivers are over 40. "They don't want to be regarded as rich or rumored to have made money by doing something wrong. And small company presidents whose businesses deal with Toyota only buy Toyota cars, even if they have the money to buy Mercedes or BMW."
Nolasco said Toyota could generate buzz for the Lexus with changes in design and styling. And the Lexus LS460 has features aimed at anticipating the needs of drivers and passengers, such as infrared sensors that read body temperatures and then provide each rider with individually attuned climate control.
But critics like Ishikawa say Toyota needs to think about the driving experience. He drove the LS460 and found it flawless. "It ran fast, powerful and safe," he said. But there was a deficit in the pizazz department.
"There is no characteristic that brings pleasure in owning it or a feeling that it is fun to drive," he said. "If cars can be said to represent the national culture, then Toyota Lexus is the car that represents Japan.
"It is a straight-A student."
bruce.wallace@latimes.com
Naoko Nishiwaki of The Times' Tokyo bureau contributed to this report.
GRAPHIC: PHOTO: ROUGH ROAD: When Toyota debuted the Lexus in its domestic market, it expected to sell 50,000 to 60,000 vehicles in the first year. After more than 14 months on the market, only half that number have been sold. Above, a Lexus at an assembly plant in Miyata, Japan. PHOTOGRAPHER: Ken Shimizu AFP/Getty Images PHOTO: LAUNCH: Toyota President Katsuaki Watanabe unveils the LS460 in Tokyo in September. PHOTOGRAPHER: Koichi Kamoshida Getty Images
LOAD-DATE: November 15, 2006
#13
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Yeah that article is a bit out of date and frankly IMO jumps the gun in its tone. Based on first year results, several articles have done the same. But looking at the results in late 2006-2007, after those articles were published...the increase has been significant: The first 12 months reached 27,000 in total; the recent 5 months reached 20,313 in total. That is on track to be a very, very competitive number against BMW and Mercedes.
The Ward's Dealer article I cited is from Dec 28, 2006, more up to date:
http://wardsdealer.com/latest/lexus_progressing_japan/
From WD, if they don't mind...or quotes can be taken. This article is freely available on their website.
The Ward's Dealer article I cited is from Dec 28, 2006, more up to date:
http://wardsdealer.com/latest/lexus_progressing_japan/
Lexus Slowly Progressing in Japan
By Roger Schreffler and Mack Chrysler
WardsAuto.com, Dec 28, 2006 8:03 AM
NAGOYA, JAPAN – Despite critics’ claims of missed targets and mistaken business priorities, post mortems on Toyota Motor Corp.’s launch of its Lexus brand into the Japanese market are premature.
As the luxury brand approaches the halfway point of its second year, opinions are divided about the past, present and future of its performance.
Sales during the first 12 months, factoring for a staggered launch of three models in August and September 2005, totaled nearly 27,000 units – 25% below target. Meanwhile, plans to boost sales to 60,000 in 2008 and 100,000 after 2010 have been put on hold.
Yasuhiko Yokoi, managing officer in charge of Toyota’s Lexus marketing division, admits initial sales targets were too ambitious.
“We were too aggressive,” he tells Ward’s at Lexus sales headquarters here. “But keep in mind that our primary objective was building the brand.”
The current annual sales goal, based on targets for four models now in dealer showrooms, is 51,000 units. While reaching that level is unlikely until the brand expands its model lineup, approximately 40,000 units is within reach next year if current monthly sales trends continue. This is due, in part, to the popularity of the all-new LS 460, the brand’s flagship model, which went on sale in September.
If internal customer satisfaction audits are accurate, the auto maker has made substantial progress, with nearly 70% of new Lexus owners giving the brand high marks, Yokoi says.
“High scores correlate with second-time purchases,” he explains. “Because the Japanese market is so mature and growth prospects are limited, our focus must be on lifetime customers.”
New LS 460 expected to help boost sales and grow Lexus brand in Japan.
In particular, Yokoi sees opportunity among well-to-do seniors and retirees, reflecting Japan’s aging population, 20% of which are now 65 and older.
“These are people who want to buy something with ‘emotional value’ – and will pay for it,” he says.
Yokoi admits to problems in launching Lexus’s Japanese dealer network, some 160 franchises comprised almost exclusively of Toyota sales companies. But he believes most issues have been resolved.
Ironically, Lexus has gone back to the future to cultivate its new sales culture. In a throwback to the practices of the 1950s and 1960s, Lexus is attempting to personalize its services, doing everything for customers, including filling out registration and insurance forms, visiting homes to answer questions and picking up cars for inspection and repair, Yokoi says.
It is not clear whether Lexus will invigorate Japan’s static luxury car market, which, depending on how the segment is defined, has peaked at about 200,000 units annually. Yokoi believes the brand will stimulate growth by fostering competition. However, views from analysts range from pessimistic to guardedly optimistic.
“First-year sales were disappointing,” says Kunhiko Shiohara, managing director at Goldman Sachs Japan Ltd. “The lineup is too small, and Japanese consumer interest in cars, in general, is diminishing.”
Seiji Sugiura, senior analyst with HSBC Securities (Japan) Ltd., adds introducing Lexus in Japan “was a mistake, as (most) models are carryovers from Toyota models with an expensive price that is hard to justify.”
Despite its reputation in North America, initial Lexus offerings in Japan, such as IS, have missed sales targets.
The IS 250, Lexus’ entry model, is priced from ¥3.9 million ($33,900), ¥1.7 million ($14,800) more than the previous generation of the car, known as the Altezza in Japan. Meanwhile, the LS 460, starting from ¥7.7 million ($67,000), carries a ¥2 million ($17,400) premium over the Celsior, the domestic version of the LS 430, which was phased out in June.
Others are less pessimistic and feel that first-year sales were disappointing, in part, because Toyota set its own bar too high, particularly for the entry-level IS, which came in 40% below target.
“The targets were extremely aggressive,” says Ashvin Chotai, director of Asian automotive research for the London office of Global Insight Inc. “The next few years will be key, although I expect Toyota to eventually succeed because they’ve made a strategic commitment to Lexus.”
Adds Lance Ealey, head of automotive consulting for Freedonia Group: “Setting aggressive sales targets, then not meeting them, is a self-inflected wound. Toyota must now be careful not to do something to devalue the brand.”
“Without question,” he says, “they (Toyota) should focus on the flagship (the LS 460), while further promoting exclusivity.”
So far, the LS 460 is off to a fast start with some 12,000 orders placed through its first month on sale.
This pace puts the LS 460 on a course to blow past primary competitors BMW 7-Series and Mercedes-Benz S-Class. However, those cars, priced at ¥17.5 million ($151,000) and ¥19 million ($165,000), respectively, could be considered in a class by themselves.
Not included in Lexus’ sales tallies in Japan are its cross/utility vehicles (RX, GX and LX), which in North America compete directly against BMW’s X3 and X5 and Mercedes’ G-, GL- and M-Class models, all of which are sold in Japan.
Combined, the three Lexus models account for nearly half of the brand’s global sales, while the RX, sold in Japan as the Toyota Harrier, is on track to post record deliveries this year of 170,000 units.
Yokoi has not ruled out introducing a Lexus CUV in the future, but not in the near-term. “For the time being we will concentrate on sedans,” he says. “Remember, it took nearly a decade before we expanded our North American lineup beyond sedans (introducing the LX 450 SUV in 1996).”
Some analysts speculate that if Lexus were to add the RX, GX and LX to its Japanese lineup, or perhaps a new RAV4-based compact SUV believed to be in the works for North America, the brand’s sales total would come close to the auto maker’s long-term target of 100,000 units.
In addition, if the LS 460 achieves its monthly target of 1,300 units, it will pass all but one Mercedes and BMW model, the BMW 3-Series. However, all models sold by the three luxury brands still trail models of Toyota’s Crown priced above ¥4 million ($35,000), the traditional cutoff point for the luxury segment in Japan.
Still, some analysts are skeptical. Chief among their concerns is image – or lack thereof – for a brand that has become so much a part of the popular culture in the U.S.
“The U.S. and Japanese markets are inherently different,” says Koji Endo, Tokyo-based research chief at Credit Suisse Securities (Japan) Ltd. “Image, for instance, is clearly more important in Japan, where Mercedes-Benz and BMW are nothing if not status symbols. It will be difficult for Lexus to woo away their customers.”
Yokoi is aware of this problem and doubts whether even the LS 460, despite its many high-tech features, will take away business from BMW and Mercedes. Yokoi is bullish, however, about the LS 600h, due out next spring, and insists the gasoline-electric hybrid vehicle has great potential to cut into the traditional customer base of the brand’s German rivals.
“We feel our hybrid technology will give BMW and Mercedes owners an excuse to switch,” he says.
So confident is Yokoi about the LS 600h that he predicts monthly sales of 200 units, which would put the model in the same volume range as BMW’s 7-Series. And while not confirming the car’s price, the executive says the base model will list for more than ¥10 million ($87,000).
Whether other technologies in Toyota’s arsenal will succeed in giving Lexus the same sort of luxury cache its European rivals have is unclear. But engineers at the auto maker’s 3-year-old Lexus Development Center are focused on accentuating differences between Toyota and Lexus brands while adding value in areas visible to the human eye, such as trim, seats, dashboard displays and other advanced technologies.
Lexus models get more vibration damping material than Toyotas, for example, allowing for a smoother and quieter ride. Lexus models also feature the auto maker’s most advanced safety and telematic systems, such as the latest Vehicle Dynamics Integrated Management (VDIM) system, which combines active steering, vehicle stability and brake controls.
Insiders, while noting that the Lexus Development Center still is only in its fourth year of operation, expect to see sharper differentiations when the next generation of models comes out in 2010 and 2011.
Meanwhile, much of the disagreement over Lexus’s performance is the direct result of confusion over what constitutes a luxury car in Japan.
For instance, some analysts count virtually all Mercedes and BMW models as luxury vehicles, regardless of price. Conversely, others exclude Toyota’s ¥11.1 million ($97,000) Century and Nissan Motor Co. Ltd.’s ¥8.4 million ($73,000) President and ¥5.3 million ($46,000) Cima, domestic versions of the Q45, Nissan’s top-of-the-line Infiniti model in North America.
In fact, based on a minimum sticker price of ¥4 million ($35,000), Toyota – not Lexus, Mercedes or BMW – is the leading luxury brand in Japan when sales of the Century and Crown, along with certain Land Cruiser and Harrier models, are included.
Largely forgotten in the discussion about Lexus’ performance is the reason why Toyota introduced the brand into Japan in the first place: There is virtually no money to be made in Japan from selling standard cars given the market more or less peaked in the mid-1990s. Competition in small-car segments, which now account for more than half of demand, has intensified, as well.
Credit Suisse Japan’s Endo estimates that Toyota makes less than ¥100,000 ($900) for each Corolla it sells. Margins on 0.66L minicars and 1.0L-1.5L B-segment cars, such as the Toyota Vitz, are even less.
Particularly problematic for the auto maker were the small profit margins (generally less than 10%) for premium and upscale cars such as the Crown, Altezza and Aristo. Even the Celsior, which by all accounts was exceedingly profitable, made less money than the LS 430, its Lexus counterpart in North America.
It still is too soon to grade Toyota on its strategy, but early signs are not discouraging. Of 161 Lexus franchises, most would appear to be in the black after just one year of business.
Meanwhile, the Japan operation is expected to play a key part in Lexus achieving its 2008 global sales target of 520,000-530,000 units, up from an estimated 470,000 in 2006.
Looking ahead, Yokoi expects North America to remain the biggest market for the brand, with Japan, at least for the midterm, coming in second.
“Although the market trend is down in Japan, the Lexus introduction was a strategic gamble, not a mistake,” says Kurt Sanger, senior analyst at Macquarie Securities (Japan) Ltd.
Adds Chris Richter, a Tokyo-based analyst with CLSA Asia-Pacific Markets Ltd.: “Japan is a tough market to crack. It’s going to be slow going, but Toyota will succeed here, eventually.”
By Roger Schreffler and Mack Chrysler
WardsAuto.com, Dec 28, 2006 8:03 AM
NAGOYA, JAPAN – Despite critics’ claims of missed targets and mistaken business priorities, post mortems on Toyota Motor Corp.’s launch of its Lexus brand into the Japanese market are premature.
As the luxury brand approaches the halfway point of its second year, opinions are divided about the past, present and future of its performance.
Sales during the first 12 months, factoring for a staggered launch of three models in August and September 2005, totaled nearly 27,000 units – 25% below target. Meanwhile, plans to boost sales to 60,000 in 2008 and 100,000 after 2010 have been put on hold.
Yasuhiko Yokoi, managing officer in charge of Toyota’s Lexus marketing division, admits initial sales targets were too ambitious.
“We were too aggressive,” he tells Ward’s at Lexus sales headquarters here. “But keep in mind that our primary objective was building the brand.”
The current annual sales goal, based on targets for four models now in dealer showrooms, is 51,000 units. While reaching that level is unlikely until the brand expands its model lineup, approximately 40,000 units is within reach next year if current monthly sales trends continue. This is due, in part, to the popularity of the all-new LS 460, the brand’s flagship model, which went on sale in September.
If internal customer satisfaction audits are accurate, the auto maker has made substantial progress, with nearly 70% of new Lexus owners giving the brand high marks, Yokoi says.
“High scores correlate with second-time purchases,” he explains. “Because the Japanese market is so mature and growth prospects are limited, our focus must be on lifetime customers.”
New LS 460 expected to help boost sales and grow Lexus brand in Japan.
In particular, Yokoi sees opportunity among well-to-do seniors and retirees, reflecting Japan’s aging population, 20% of which are now 65 and older.
“These are people who want to buy something with ‘emotional value’ – and will pay for it,” he says.
Yokoi admits to problems in launching Lexus’s Japanese dealer network, some 160 franchises comprised almost exclusively of Toyota sales companies. But he believes most issues have been resolved.
Ironically, Lexus has gone back to the future to cultivate its new sales culture. In a throwback to the practices of the 1950s and 1960s, Lexus is attempting to personalize its services, doing everything for customers, including filling out registration and insurance forms, visiting homes to answer questions and picking up cars for inspection and repair, Yokoi says.
It is not clear whether Lexus will invigorate Japan’s static luxury car market, which, depending on how the segment is defined, has peaked at about 200,000 units annually. Yokoi believes the brand will stimulate growth by fostering competition. However, views from analysts range from pessimistic to guardedly optimistic.
“First-year sales were disappointing,” says Kunhiko Shiohara, managing director at Goldman Sachs Japan Ltd. “The lineup is too small, and Japanese consumer interest in cars, in general, is diminishing.”
Seiji Sugiura, senior analyst with HSBC Securities (Japan) Ltd., adds introducing Lexus in Japan “was a mistake, as (most) models are carryovers from Toyota models with an expensive price that is hard to justify.”
Despite its reputation in North America, initial Lexus offerings in Japan, such as IS, have missed sales targets.
The IS 250, Lexus’ entry model, is priced from ¥3.9 million ($33,900), ¥1.7 million ($14,800) more than the previous generation of the car, known as the Altezza in Japan. Meanwhile, the LS 460, starting from ¥7.7 million ($67,000), carries a ¥2 million ($17,400) premium over the Celsior, the domestic version of the LS 430, which was phased out in June.
Others are less pessimistic and feel that first-year sales were disappointing, in part, because Toyota set its own bar too high, particularly for the entry-level IS, which came in 40% below target.
“The targets were extremely aggressive,” says Ashvin Chotai, director of Asian automotive research for the London office of Global Insight Inc. “The next few years will be key, although I expect Toyota to eventually succeed because they’ve made a strategic commitment to Lexus.”
Adds Lance Ealey, head of automotive consulting for Freedonia Group: “Setting aggressive sales targets, then not meeting them, is a self-inflected wound. Toyota must now be careful not to do something to devalue the brand.”
“Without question,” he says, “they (Toyota) should focus on the flagship (the LS 460), while further promoting exclusivity.”
So far, the LS 460 is off to a fast start with some 12,000 orders placed through its first month on sale.
This pace puts the LS 460 on a course to blow past primary competitors BMW 7-Series and Mercedes-Benz S-Class. However, those cars, priced at ¥17.5 million ($151,000) and ¥19 million ($165,000), respectively, could be considered in a class by themselves.
Not included in Lexus’ sales tallies in Japan are its cross/utility vehicles (RX, GX and LX), which in North America compete directly against BMW’s X3 and X5 and Mercedes’ G-, GL- and M-Class models, all of which are sold in Japan.
Combined, the three Lexus models account for nearly half of the brand’s global sales, while the RX, sold in Japan as the Toyota Harrier, is on track to post record deliveries this year of 170,000 units.
Yokoi has not ruled out introducing a Lexus CUV in the future, but not in the near-term. “For the time being we will concentrate on sedans,” he says. “Remember, it took nearly a decade before we expanded our North American lineup beyond sedans (introducing the LX 450 SUV in 1996).”
Some analysts speculate that if Lexus were to add the RX, GX and LX to its Japanese lineup, or perhaps a new RAV4-based compact SUV believed to be in the works for North America, the brand’s sales total would come close to the auto maker’s long-term target of 100,000 units.
In addition, if the LS 460 achieves its monthly target of 1,300 units, it will pass all but one Mercedes and BMW model, the BMW 3-Series. However, all models sold by the three luxury brands still trail models of Toyota’s Crown priced above ¥4 million ($35,000), the traditional cutoff point for the luxury segment in Japan.
Still, some analysts are skeptical. Chief among their concerns is image – or lack thereof – for a brand that has become so much a part of the popular culture in the U.S.
“The U.S. and Japanese markets are inherently different,” says Koji Endo, Tokyo-based research chief at Credit Suisse Securities (Japan) Ltd. “Image, for instance, is clearly more important in Japan, where Mercedes-Benz and BMW are nothing if not status symbols. It will be difficult for Lexus to woo away their customers.”
Yokoi is aware of this problem and doubts whether even the LS 460, despite its many high-tech features, will take away business from BMW and Mercedes. Yokoi is bullish, however, about the LS 600h, due out next spring, and insists the gasoline-electric hybrid vehicle has great potential to cut into the traditional customer base of the brand’s German rivals.
“We feel our hybrid technology will give BMW and Mercedes owners an excuse to switch,” he says.
So confident is Yokoi about the LS 600h that he predicts monthly sales of 200 units, which would put the model in the same volume range as BMW’s 7-Series. And while not confirming the car’s price, the executive says the base model will list for more than ¥10 million ($87,000).
Whether other technologies in Toyota’s arsenal will succeed in giving Lexus the same sort of luxury cache its European rivals have is unclear. But engineers at the auto maker’s 3-year-old Lexus Development Center are focused on accentuating differences between Toyota and Lexus brands while adding value in areas visible to the human eye, such as trim, seats, dashboard displays and other advanced technologies.
Lexus models get more vibration damping material than Toyotas, for example, allowing for a smoother and quieter ride. Lexus models also feature the auto maker’s most advanced safety and telematic systems, such as the latest Vehicle Dynamics Integrated Management (VDIM) system, which combines active steering, vehicle stability and brake controls.
Insiders, while noting that the Lexus Development Center still is only in its fourth year of operation, expect to see sharper differentiations when the next generation of models comes out in 2010 and 2011.
Meanwhile, much of the disagreement over Lexus’s performance is the direct result of confusion over what constitutes a luxury car in Japan.
For instance, some analysts count virtually all Mercedes and BMW models as luxury vehicles, regardless of price. Conversely, others exclude Toyota’s ¥11.1 million ($97,000) Century and Nissan Motor Co. Ltd.’s ¥8.4 million ($73,000) President and ¥5.3 million ($46,000) Cima, domestic versions of the Q45, Nissan’s top-of-the-line Infiniti model in North America.
In fact, based on a minimum sticker price of ¥4 million ($35,000), Toyota – not Lexus, Mercedes or BMW – is the leading luxury brand in Japan when sales of the Century and Crown, along with certain Land Cruiser and Harrier models, are included.
Largely forgotten in the discussion about Lexus’ performance is the reason why Toyota introduced the brand into Japan in the first place: There is virtually no money to be made in Japan from selling standard cars given the market more or less peaked in the mid-1990s. Competition in small-car segments, which now account for more than half of demand, has intensified, as well.
Credit Suisse Japan’s Endo estimates that Toyota makes less than ¥100,000 ($900) for each Corolla it sells. Margins on 0.66L minicars and 1.0L-1.5L B-segment cars, such as the Toyota Vitz, are even less.
Particularly problematic for the auto maker were the small profit margins (generally less than 10%) for premium and upscale cars such as the Crown, Altezza and Aristo. Even the Celsior, which by all accounts was exceedingly profitable, made less money than the LS 430, its Lexus counterpart in North America.
It still is too soon to grade Toyota on its strategy, but early signs are not discouraging. Of 161 Lexus franchises, most would appear to be in the black after just one year of business.
Meanwhile, the Japan operation is expected to play a key part in Lexus achieving its 2008 global sales target of 520,000-530,000 units, up from an estimated 470,000 in 2006.
Looking ahead, Yokoi expects North America to remain the biggest market for the brand, with Japan, at least for the midterm, coming in second.
“Although the market trend is down in Japan, the Lexus introduction was a strategic gamble, not a mistake,” says Kurt Sanger, senior analyst at Macquarie Securities (Japan) Ltd.
Adds Chris Richter, a Tokyo-based analyst with CLSA Asia-Pacific Markets Ltd.: “Japan is a tough market to crack. It’s going to be slow going, but Toyota will succeed here, eventually.”
Last edited by encore888; 04-19-07 at 01:42 PM.
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I think Lexus Japan wants to position the new LS as the Toyota group's most prestigious vehicle series that they've ever made (as they want to replace the V12 Century).
In all seriousness, I can't wait for the LS 600 Hybrid LWB to launch there. I think that's gonna put it as the "cleanest flagship vehicle in the streets of Japan."![Smilie](https://www.clublexus.com/forums/images/smilies/smile.gif)
In all seriousness, I can't wait for the LS 600 Hybrid LWB to launch there. I think that's gonna put it as the "cleanest flagship vehicle in the streets of Japan."
![Smilie](https://www.clublexus.com/forums/images/smilies/smile.gif)