From Question Mark to Landmark - Lexus Celebrates 20 Years
01-16-09, 12:17 PM
#17
Lexus has truly had a miraculous 20 years...reading an article like this that lists all of their achievements and success really puts things into perspective.
What will be interesting though, is how Lexus will handle the next ten years or so. Until recently the American car companies have posed little threat to Lexus' domination in the luxury arena as they have built several lackluster products that failed to resonate with customers like other premium products have. Times seem to be changing as even Lincoln is showing products that are likely to generate greater interest from consumers- products that are aimed squarely at Lexus bread and butter ES and RX. Whether or not they affect these models will be seen in time, but the American companies seem to be somewhat rejuvenated and more focused even in the turbulent and uncertain automotive market, and the same could be said for Hyundai's relentless and surprising march into the premium market. Additionally we are facing trying economic times, an even greater degree of globalization and connectedness, and interesting opportunities in emerging markets. How Lexus tackles all of these challenges will be interesting.
A Changing and More Competitive Marketplace
Cadillac's new porftolio- CTS, CTSV, SRX and Escalade- are some of the most polished and competitive products that we have seen from an American luxury company in a long time. Lincoln's models- MKZ, MKS, MKX, and MKT- while Ford rebadges, do seem qualified and competitive against some Lexus models. Those owners who are looking for traditionally luxurious, high quality interiors with a smooth ride and new technology will no longer only be considering the ES- Genesis, CTS, MKS, and MKZ are all more competitive than ever and the sales figures show as much. The ES still seems to be holding its sales crown without so much as a sweat, but IMO (and to many others) Lexus got complacent with this generation of ES and it is no longer the rock solid car that it once was. Lexus will have to reevaluate the landscape for the next generation, as I think the Americans and Koreans will become increasingly qualified players in this segment.
The new SRX, while nice, does not seem that interesting to me but I still think that it could pose some problems for the RX. If CTS owners are looking for similar styling and features but with extra ground clearance, the SRX is a sure bet...and I think this generation will do significantly better than the last. Lincoln MKX and MKT are also solid competitors that have done well for Linclon, and are aimed squarely at RX territory. They are both solid first efforts and considering Ford's renewed focus on quality, design, technology and performance, they could cause quite a problem for RX in the future. I would also not be surprised to see Hyundai develop a RWD based crossover that sits on the Genesis platfom.
The new RX has split most of the Lexus faithful- it's exterior design and radical departure from Lexus standards for interior design have left some people scratching their heads, and some anxiously awaiting a test drive. The success of their new efforts remains yet to be determined as the car goes on sale next month. The new remote touch technology, while an interesting and new concept, will probably not be as good as touch screen to me. Working in a dealership, I have seen many of Lexus' older clients struggle with the existing Navigation/HVAC/Audio controls and cannot forsee this being any easier for them. Perhaps I am wrong, but time will tell.
Lexus will also continue to face a myraid of models from the German companies as well- new 1 Series variants, a rumored X4 crossover, hybrids, Mercedes' new GLK and E Class coupe, and Audi seems continually determined to take a larger piece of the luxury segment pie. Can Lexus continue to outsell these brands amidst numerous new product launches? Will they face off with new German products and venture into these new, changing segments? Time will tell.
L-Finesse will also be entering it's second generation in most applications, and we have yet to see how the current designs will progress and evolve. The GX and SC are the only two products that have not received this design treatment but their days are coming soon. With these changes in the sheetmetal, we can obviously expect Remote Touch to sweet across all redesigned vehicles. Will it resonate with customers?
One thing is for certain, the old days of "big, medium, small" are no longer going to apply in the luxury segment as competitors and classifications are ever changing. Lexus has obviously responded to this with the new HS, and it's GS-ES-IS sedan strategy, but as the Germans diversify past these classes, how will Lexus respond? Also to consider is the hopeful expansion of F cars, hybrid models, and if we are lucky...coupes. This is one segment that I do hope they follow as the SC and ISc will not necessarily suffice against a new C coupe, E coupe, CL, SL, 6 series, 3 series, Z4, A/S5, and others. Lexus needs to show consumers that they are willing to diversify and change. And once again, Hyundai has shown that they are capable of building a worthy competitor...this will not end with just the Genesis and Genesis coupe. Lexus needs to be aware, responsive, and intuitive and yet the Japanese have shown to be historically slow to respond.
Slowing Economies and Emerging Markets
We will not have the full answer of "how bad is it?" until the market actually starts to swing upwards and we can look back and determine where the bottom actually was. That said, I think this financial crisis has caused many Americans to rethink what is really necessary and often the first things to get cut are luxury products and goods. For the next few years I think we are likely to see a retraction in spending from American households even if things bounce back. Last year was the first time in history that Americans started actively trying to pay off their debts, foreclosures swept our own neighborhoods, towns, cities, and states, and millions of people are filing for unemployment right this minute. Even if the economy does start to come back, I think it will be a while before any of the luxury brands start to sell close to 300,000 cars again. This year has been a brutal one for all in the car industry, but each of the car companies is going to have to reevaluate their customers, the economy, and their products from here on out- this is vastly different landscape than the 90s, or even the early 2000s. Luxury companies will be in a harder place as Americans will likely be less willing to dish out $50, $70, or $100K on a car that essentially does the same thing as one that costs half as much without the extras. How will they cope with America's new more discretionary spending habits?
Lexus boomed in the late 90s and early 2000s with a thriving economy and little worry about tomorrow...now people in all income brackets are trying to figure out how to put food on the table tomorrow or to send their kids to college. These matters were laughable just a few years ago when luxury car sales increased substantially year over year, and now they are very harsh realities. How will Lexus respond? How will Americans respond?
China, India, Russia, and other Asian markets once held great promise for both Lexus and Infiniti but it has been proven that both India and China, while thriving for a while, were economies that are propped up largely by our own and they have begun to feel the waves generated by our own financial crisis. The insatiable demand for American and luxury goods is now slowing down significantly. To what extent? We don't know yet, but recent reports are showing that China's economy could potentially be in a worse situation than ours with India somewhat sure to follow.
Europe has also proven to be a hard egg to crack for Lexus. The IS220d, while a seemingly great first effort, has not exactly been a booming success. How will Lexus continue their European strategy? Hybrids? New Diesels? Who knows but the economic woes and financial reservation of buyers around the globe makes it hard to even predict.
Where to go from Here
As outlined above, the landscape that Lexus thrived in for the last several years has now been set almost completely ablaze in just the last few months. Even considering all of this, the company has seen dark times before and it has also shown that it has the prudence and ability to respond accordingly, with both due intelligence and insight. That said, recent world and economic events would dictate that the rule books are currently being written, pen still in hand. If Lexus can continue to deliver on it's core competency of a high quality product with seamless customer service, will that be enough to bring them through the next decade or two, with similar success to what we have already seen? Even despite the L-Finesse, remote touch, and hybrid technology, this is still the same company that we have all grown to know and love (and sometimes hate) so perhaps for now we have to trust that they will continue to extend the Lexus legacy far into the future with a sound business strategy and the ability to respond, to anything, accordingly.
What will be interesting though, is how Lexus will handle the next ten years or so. Until recently the American car companies have posed little threat to Lexus' domination in the luxury arena as they have built several lackluster products that failed to resonate with customers like other premium products have. Times seem to be changing as even Lincoln is showing products that are likely to generate greater interest from consumers- products that are aimed squarely at Lexus bread and butter ES and RX. Whether or not they affect these models will be seen in time, but the American companies seem to be somewhat rejuvenated and more focused even in the turbulent and uncertain automotive market, and the same could be said for Hyundai's relentless and surprising march into the premium market. Additionally we are facing trying economic times, an even greater degree of globalization and connectedness, and interesting opportunities in emerging markets. How Lexus tackles all of these challenges will be interesting.
A Changing and More Competitive Marketplace
Cadillac's new porftolio- CTS, CTSV, SRX and Escalade- are some of the most polished and competitive products that we have seen from an American luxury company in a long time. Lincoln's models- MKZ, MKS, MKX, and MKT- while Ford rebadges, do seem qualified and competitive against some Lexus models. Those owners who are looking for traditionally luxurious, high quality interiors with a smooth ride and new technology will no longer only be considering the ES- Genesis, CTS, MKS, and MKZ are all more competitive than ever and the sales figures show as much. The ES still seems to be holding its sales crown without so much as a sweat, but IMO (and to many others) Lexus got complacent with this generation of ES and it is no longer the rock solid car that it once was. Lexus will have to reevaluate the landscape for the next generation, as I think the Americans and Koreans will become increasingly qualified players in this segment.
The new SRX, while nice, does not seem that interesting to me but I still think that it could pose some problems for the RX. If CTS owners are looking for similar styling and features but with extra ground clearance, the SRX is a sure bet...and I think this generation will do significantly better than the last. Lincoln MKX and MKT are also solid competitors that have done well for Linclon, and are aimed squarely at RX territory. They are both solid first efforts and considering Ford's renewed focus on quality, design, technology and performance, they could cause quite a problem for RX in the future. I would also not be surprised to see Hyundai develop a RWD based crossover that sits on the Genesis platfom.
The new RX has split most of the Lexus faithful- it's exterior design and radical departure from Lexus standards for interior design have left some people scratching their heads, and some anxiously awaiting a test drive. The success of their new efforts remains yet to be determined as the car goes on sale next month. The new remote touch technology, while an interesting and new concept, will probably not be as good as touch screen to me. Working in a dealership, I have seen many of Lexus' older clients struggle with the existing Navigation/HVAC/Audio controls and cannot forsee this being any easier for them. Perhaps I am wrong, but time will tell.
Lexus will also continue to face a myraid of models from the German companies as well- new 1 Series variants, a rumored X4 crossover, hybrids, Mercedes' new GLK and E Class coupe, and Audi seems continually determined to take a larger piece of the luxury segment pie. Can Lexus continue to outsell these brands amidst numerous new product launches? Will they face off with new German products and venture into these new, changing segments? Time will tell.
L-Finesse will also be entering it's second generation in most applications, and we have yet to see how the current designs will progress and evolve. The GX and SC are the only two products that have not received this design treatment but their days are coming soon. With these changes in the sheetmetal, we can obviously expect Remote Touch to sweet across all redesigned vehicles. Will it resonate with customers?
One thing is for certain, the old days of "big, medium, small" are no longer going to apply in the luxury segment as competitors and classifications are ever changing. Lexus has obviously responded to this with the new HS, and it's GS-ES-IS sedan strategy, but as the Germans diversify past these classes, how will Lexus respond? Also to consider is the hopeful expansion of F cars, hybrid models, and if we are lucky...coupes. This is one segment that I do hope they follow as the SC and ISc will not necessarily suffice against a new C coupe, E coupe, CL, SL, 6 series, 3 series, Z4, A/S5, and others. Lexus needs to show consumers that they are willing to diversify and change. And once again, Hyundai has shown that they are capable of building a worthy competitor...this will not end with just the Genesis and Genesis coupe. Lexus needs to be aware, responsive, and intuitive and yet the Japanese have shown to be historically slow to respond.
Slowing Economies and Emerging Markets
We will not have the full answer of "how bad is it?" until the market actually starts to swing upwards and we can look back and determine where the bottom actually was. That said, I think this financial crisis has caused many Americans to rethink what is really necessary and often the first things to get cut are luxury products and goods. For the next few years I think we are likely to see a retraction in spending from American households even if things bounce back. Last year was the first time in history that Americans started actively trying to pay off their debts, foreclosures swept our own neighborhoods, towns, cities, and states, and millions of people are filing for unemployment right this minute. Even if the economy does start to come back, I think it will be a while before any of the luxury brands start to sell close to 300,000 cars again. This year has been a brutal one for all in the car industry, but each of the car companies is going to have to reevaluate their customers, the economy, and their products from here on out- this is vastly different landscape than the 90s, or even the early 2000s. Luxury companies will be in a harder place as Americans will likely be less willing to dish out $50, $70, or $100K on a car that essentially does the same thing as one that costs half as much without the extras. How will they cope with America's new more discretionary spending habits?
Lexus boomed in the late 90s and early 2000s with a thriving economy and little worry about tomorrow...now people in all income brackets are trying to figure out how to put food on the table tomorrow or to send their kids to college. These matters were laughable just a few years ago when luxury car sales increased substantially year over year, and now they are very harsh realities. How will Lexus respond? How will Americans respond?
China, India, Russia, and other Asian markets once held great promise for both Lexus and Infiniti but it has been proven that both India and China, while thriving for a while, were economies that are propped up largely by our own and they have begun to feel the waves generated by our own financial crisis. The insatiable demand for American and luxury goods is now slowing down significantly. To what extent? We don't know yet, but recent reports are showing that China's economy could potentially be in a worse situation than ours with India somewhat sure to follow.
Europe has also proven to be a hard egg to crack for Lexus. The IS220d, while a seemingly great first effort, has not exactly been a booming success. How will Lexus continue their European strategy? Hybrids? New Diesels? Who knows but the economic woes and financial reservation of buyers around the globe makes it hard to even predict.
Where to go from Here
As outlined above, the landscape that Lexus thrived in for the last several years has now been set almost completely ablaze in just the last few months. Even considering all of this, the company has seen dark times before and it has also shown that it has the prudence and ability to respond accordingly, with both due intelligence and insight. That said, recent world and economic events would dictate that the rule books are currently being written, pen still in hand. If Lexus can continue to deliver on it's core competency of a high quality product with seamless customer service, will that be enough to bring them through the next decade or two, with similar success to what we have already seen? Even despite the L-Finesse, remote touch, and hybrid technology, this is still the same company that we have all grown to know and love (and sometimes hate) so perhaps for now we have to trust that they will continue to extend the Lexus legacy far into the future with a sound business strategy and the ability to respond, to anything, accordingly.
01-16-09, 05:12 PM
#18
Fascinating analysis, MPLexus301! Very important points, the market is continually evolving and now there is major upheaval. Some thoughts of mine...first, the Remote Touch system and Lexus customers does beg the question, what percentage of Lexus' customer base are drawn to the brand's user-friendliness? Early reports of the voice recognition and controller use are pretty good--but it remains to be seen. Also, the onslaught of products from the Germans--will they expand segments like the 1-series and take away market share, or will they simply broaden a lineup without much effect (a la Audi)? Moreover, Lexus must pay close attention to the competition from Cadillac, and also IMO Buick, plus to some extent Hyundai. That said, I do think that their main competition remains BMW and Mercedes, followed by the rival Japanese marques, but recent efforts by GM's luxury brands plus Lincoln show a more resurgent US design effort (if not on the financial side--and this may still have impact, with GM employee pricing etc). The HS 250h sounds like the makings of a good segment expansion for Lexus--and it definitely needs new products. Not to mention, like you said--coupes!!!
So there are questions for Lexus, like you said. Officially, executives say they are not gunning for the #1 spot, but they have held it now for 8 years. IMO, the product lines are running good to well, with the RX/ES holding down the fort and the 2IS a successful expansion, the LS the flagship stalwart, and the 3GS doing a reasonable amount but underperforming compared to the brand and its potential. Lexus' likely focus is expansion internationally. In 2007 the reports were for gearing up for production capacity increase up to 800,000 a year--close to Audi's 1 million mark, and nearing half of BMW/Mercedes. Now with the global financial crisis, that has likely slowed, but the goal is simply further off. The key for Lexus USA is to balance the global expansion focus with US sales market trends and demands. And I think mostly it will be synergistic to have the global new product launches resonate even more strongly in the US when they are brought to this market, with the international attention and new technologies these global products bring.
One key difference for Lexus USA is, now that Lexus has gone from question mark to benchmark, it is far from the young upstart. It is now the established player--and dominant in key areas. One main issue is to keep catering to the vast customer base it has built up--efficiently and attentively. Cultivating loyalty and brand reputation.
Finally, I think it's also fair to point out that the landscape that is now on fire (in turmoil economically) is one that is not just affecting Lexus but affecting all brands to a great extent. How each brand reacts and manages its response will be key to the next few years and possibly the next decade. But long-term I expect Toyota will continue to invest in Lexus and I hope they see through these difficult times with an eye on longevity and success.
So there are questions for Lexus, like you said. Officially, executives say they are not gunning for the #1 spot, but they have held it now for 8 years. IMO, the product lines are running good to well, with the RX/ES holding down the fort and the 2IS a successful expansion, the LS the flagship stalwart, and the 3GS doing a reasonable amount but underperforming compared to the brand and its potential. Lexus' likely focus is expansion internationally. In 2007 the reports were for gearing up for production capacity increase up to 800,000 a year--close to Audi's 1 million mark, and nearing half of BMW/Mercedes. Now with the global financial crisis, that has likely slowed, but the goal is simply further off. The key for Lexus USA is to balance the global expansion focus with US sales market trends and demands. And I think mostly it will be synergistic to have the global new product launches resonate even more strongly in the US when they are brought to this market, with the international attention and new technologies these global products bring.
One key difference for Lexus USA is, now that Lexus has gone from question mark to benchmark, it is far from the young upstart. It is now the established player--and dominant in key areas. One main issue is to keep catering to the vast customer base it has built up--efficiently and attentively. Cultivating loyalty and brand reputation.
Finally, I think it's also fair to point out that the landscape that is now on fire (in turmoil economically) is one that is not just affecting Lexus but affecting all brands to a great extent. How each brand reacts and manages its response will be key to the next few years and possibly the next decade. But long-term I expect Toyota will continue to invest in Lexus and I hope they see through these difficult times with an eye on longevity and success.
02-01-09, 04:02 PM
#19
Lexus Fanatic
I remeber in 1989 my friends dad bought an LS400 with no leather. It was extremely quiet and smooth. The guy is a realestate agent and still has the car. It has 400k miles and still runs fine. Its a piece of history. I remeber very clearly all of the neighbors, family members , busniess associates asking " what the hell is a Lexus". Then we would explain it a high end luxury Toyota. 20 years later everyone and their mom knows what a Lexus is, and they all know its one of the highest quality luxury cars in the world. Not bad for 20 years. I am hooked . I am in love with my Lexus and I strogly intend to get the wife a Lexus when her lease is up on thr Acura TL she is driving right now
02-01-09, 04:31 PM
#20
Lexus Fanatic
When we started seeing V8's in mid-sized Beemers, rear electric sun shades in Benz's, just 2 examples of the leading premium German car companies taking the lead from Lexus.
02-01-09, 11:03 PM
#21
Lexus Fanatic
The LS is truely amazing. The flag ship technology and inovations in this car are above and beyond. Not saying BMW and Benz is slacking on the technology, but in the LS it all works all of the time\\
The photo below is an LS460 on 24's
The photo below is an LS460 on 24's
02-02-09, 12:12 PM
#23
02-02-09, 01:15 PM
#25
Lexus Fanatic
To help clarify:
The examples that I gave pertains to BMW's shift away from predominately straight six to V8's which has a lot to do with influence and success of Lexus LS (although they probably will not admit to this). The other example is just a luxury gizmo that now seems almost a requirement in a premium sedan.
Read it wrong the first time.
02-02-09, 09:01 PM
#28
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When I was shopping, everyone else was missing cooled seats, or AWD, or HIDs, or keyless entry-pushbutton start, or buttery leather seats, or a top-notch stereo, or great reliability, or Lexus prestige, or great styling, or all these at a price that matches the IS 250 AWD. The only thing it didn't have is a hardtop convertible (fixed!). Since I don't expect them to ever combine AWD and convertible, maybe after a redesign I'll get a convertible (which may be a hybrid) and let someone else drive my AWD except on snowy/icy days. Only the new Audi's (never been in one) and Mercedes E-class (pricey) have styling that could draw me away from Lexus, but those are alot of bullet-points they are going to have to NAIL. Lexus is the best!
Great review of 20 years of Lexus nailing it from the start. You knew that they'd be reliable, coming from Toyota, and by charging prices under the other luxury makes, Lexus had the total package for anyone not preoccupied by the handling of a BMW.
Great review of 20 years of Lexus nailing it from the start. You knew that they'd be reliable, coming from Toyota, and by charging prices under the other luxury makes, Lexus had the total package for anyone not preoccupied by the handling of a BMW.
02-18-09, 06:34 PM
#29
Lexus Fanatic
I was watching a stand up video where Dave Attell refers to a Kiwi as " the Lexus of the fruit world ". Even common refernces today are made with refrence to Lexus being the top notch
02-22-09, 07:00 AM
#30
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I wonder why Mercedes didn't test the US market with these cars.
Edit: Found it! Thanks to M.W. from the AZ forums for this cut-out from a 2007 issue of Autozeitung.
Last edited by DustinV; 02-22-09 at 09:27 AM.