Tuesday, July 17, 2007

Lexus to boost hybrid production

David Shepardson / Detroit News Washington Bureau

WASHINGTON -- Lexus will increase the number of hybrids it builds, a senior executive said today, as Toyota's luxury division hopes to increase annual sales by 100,000 or more overall.

"Yes, there will be more hybrids in the Lexus lineup," said James H. Colon, vice president for sales and dealer development at a meeting of auto reporters here.

Lexus currently offers three hybrids, including two sedans and an SUV.

Colon said the 2008 Lexus LS 600h -- a new hybrid with a V-8 engine and 430 horsepower -- will start at $104,765. An optional $12,570 executive seating package offers an airplane-like seat that has a foot rest and can give the passenger a shiatsu massage. The car also features "rear-seat air purifier" and "power rear-door sunshades."

Lexus expects to sell just 2,000 per year. "Not a huge volume, but twice the combined sales of the highest-end Mercedes and BMW models," Colon said.

Reaching out to affluent drivers who care about the environment, Colon noted the new Lexus advertising slogan: "Gives more to the driver, takes less from the world."

Lexus has been increasing horsepower, towing capacity and the size of its vehicles, while using some of the efficiency gains from its hybrids to improve performance, rather than fuel economy alone.

But the fuel efficiency of the Lexus 600h is 20 miles per gallon in the city and 22 in the highway -- one of the lowest of any hybrids on the market.

Lexus thinks luxury car sales nationally will jump by 20 percent to 2.3 million by 2015, over the current 1.9 million. Lexus saw its sales jump 6.3 percent in the first half of 2007.

Lexus, with just 221 dealers nationwide, sells about 1,100 vehicles per dealership -- versus 500 for Mercedes-Benz and BMW, with each have about 350 dealers. Lexus dealers -- among the most profitable in the nation -- have invested $1 billion in new and expanded facilities in the last 5 years, including $700 million in the last two years.

Toyota has forecast that 16.3 million vehicles will be sold in 2007, down from 2006. But it predicts that sales will hit 18 million annually by sometime late next decade.

"As our tough and resilient industry gains traction after this little dip, we expect to see the Detroit Three on the mend and on the way to new success," Colon told the Washington Automotive Press Association.