Growth Opportunities for Lexus - Can They Afford to (continue to) Wait?
10-25-11, 08:35 AM
#1
Growth Opportunities for Lexus - Can They Afford to (continue to) Wait?
A few years ago, I made a post asking how long Lexus could remain #1 in US sales in the face of a German product onslaught at the bottom end of the market: 1 Series, A3, Q5, GLK, etc. Lexus recently responded with the CT which has been a successful product, even despite production issues created by the tsunami earlier this year. The HS was an earlier shot at this market, but failed.
This year, Lexus will obviously be overtaken in the sales race and the Germans are showing no signs of relenting: A and B classes are closer to fruition, A3 will spawn several new models in its next generation, Q3 is coming next year, 1 Series looks like it will also be offered in new variants and there are always rumors of an X2 and X4 waiting in the wings.
Lexus will continue to lose sales here for the forseeable future, especially without a small SUV.
With this considered, Lexus is facing another set of challenges at the top of the market, where the Germans have again unleashed another proliferation of new models including four door coupes, coupey-SUV things and sports cars.
Audi introduced the A7 and R8, the Q7 will be redesigned soon and there are rumors of an X6-type crossover, as well as R4 sportscar.
BMW just finished up the second generation 6 series, is introducing the 6 Series GC, and of course has the X6.
Mercedes just redesigned the ML and CLS, will shortly redesign the GL, and plans to add new four door coupes and suv-coupes in the next year. SLS can be looped in here as well. E class coupe is another consideration.
Lexus has the high-priced, low volume LX which sells in very limited quantities and the GX, which has a somewhat broader appeal than the LX, but still struggles with buyers outside it's loyal existing fanbase. GS will be all-new next year, ISF is low volume and the SC is dead. This leaves the LS as the only Lexus that sells reliably, consistently in the higher-end space. (Disclaimer: I am not saying that products like the 6 series or X6 sell any better!)
Lexus has no four door coupes, nothing to compete with the X5 or other sporty unibody SUVs, no high end X6-esque CUV, and no reasonably priced sports car. As I love the LFA, at $375K and a 500 unit run, it is not exactly relevant here. I am not saying that Lexus needs to chase every segment, but I think it's important to acknowledge that Lexus is not keeping pace with the market - and this is now, THE market. These cars went from being one-off toys to segment leaders. Lexus needs to acknowledge this.
A few years ago, we looked at the first gen CLS and thought it was a one-off experiment from Mercedes that would fail to catch on. Now, it has spawned an entire segment with several different cars.
When the X6 was revealed, we all scoffed and said it was doomed. Now, it too has created an entirely new segment that continues to grow.
If you want to be technical, high-powered, fun to drive CUV/SUVs have been around longer than either of the above segments, and Lexus has yet to challenge the X5 or Cayenne.
Even though these niches are rather low volume, both at the low and high ends of the market, Lexus will continue to suffer if they do not diversify into these segments. Luxury is about excess and having options is a large part of this concept. In fact, I once read a quote that said something to the effect of, "True luxury is about having choices," which makes sense once you think about it a bit. In terms of product, we are watching BMW, Mercedes and even Audi pull away from other brands like Lexus, Infiniti, Acura and Cadillac who are sticking to more traditional product lineups. Lexus is already fighting the Japanese luxury fight nearly solo (in Tier 1, at least), and as the Germans continue to create new models and segments, Lexus fails to look "ready".
It used to be that if you wanted a midsize luxury sedan, you had one option from Lexus, one option from BMW, one option from Mercedes, etc. Now, you can walk into a Mercedes dealership and compare a CLS to an E Class, or to Audi and cross shop the A7 and A8. Soon, BMW will offer the same structure with the 5, 7 and 6GC. The GS is no longer competing against one car from each brand, as the competitive field has effectively doubled. No, they aren't exactly apples to apples, but there are plenty of folks going to a Mercedes dealership for an E550 and walking out with a CLS 550, and I'd venture to say this is happening at Audi with the A7, and will happen to BMW with the 6GC. The GS is the competitor to the standard sedan versions and many people don't really buy into the marketing hype of a 4 door coupe - it's simply, the midsize Mercedes or Audi, it just so happens that they offer two of them, and one is curvier than the other.
The "similar size, different flavor" approach of the sedan/4 door coupe markets also gives buyers a reason to stay in the family once they are ready to shop for a new car. Loved your E Class, but want something a little edgier? Try the CLS! Enjoyed your A6, but the kids finally left for college? Give the A7 a shot. This phenomenon does not speak only to sedans and 4 door coupes: as the gap between sedan and SUV is bridged, the lines are blurred even more. Want a little more ground clearance in something that still drives like your 5? Try the X6. See where I am going here? I have seen these types of buyer decisions play out several times in my circle of friends, neighbors and coworkers, and the point is that I think the Germans are doing a better job of keeping buyers in the brand by offering more product options.
One final thought - I think it looks bad for Lexus to be neglecting these segments. People look at the CLS and X6 and acknowledge that Lexus doesn't really offer anything comparable. To some, it might not matter because they aren't in the market for such a car. In terms of brand-building and image, and making people aspire to your brand, it most definitely matters.
I have said before that it will be difficult for Lexus to deviate from the GX/LX strategy because both are solid products and easy Toyota re-designs (4Runner and Land Cruiser), but I think the void created by a midsize, 3 row, V6/V8 CUV continues to grow. RX and GX cater to relatively specific markets: RX is very much a CUV from how it drives to how it looks. GX is very trucky. There is a space here for something in between them - a "move up" from the RX and a different flavor with better MPG and functionality and the GX. Think X5.
A small CUV is a must have. The RX is significantly bigger than the GLK and Q5, and there is a space for something smaller and starting around $30K.
I'd like to see Lexus introduce a four door coupe that served as a showcase for hybrid technology - V6 and V8 hybrid options, and perhaps an F model at the top end. Lexus is the hybrid leader and I think an emotional product, such as a four door coupe, woud be 1) a great way to showcase their prowess and 2) a good way to differentiate from the CLS and A7.
A $100-150K sports car would be a great way to make the tech and "know-how" from the LFA available to more people. As it stands now, the LFA is priced well away from the R8, SLS, 911, and others. I think it would be doable for Lexus to pull a nice V8 from the F line and put it into a lightweight sports car chassis. This would be a BIG win, especially following on the heels of the LFA.
I know that Lexus has an aging product line, but I do not think that is a significant part of the problem here. A lack of new product and a lack of product in general, are two different things. Akio mentions that there is an entirely new group of people responsible for the future of Lexus, so let's hope that they acknowledge some of these shortcomings and have quick plans to address them.
This year, Lexus will obviously be overtaken in the sales race and the Germans are showing no signs of relenting: A and B classes are closer to fruition, A3 will spawn several new models in its next generation, Q3 is coming next year, 1 Series looks like it will also be offered in new variants and there are always rumors of an X2 and X4 waiting in the wings.
Lexus will continue to lose sales here for the forseeable future, especially without a small SUV.
With this considered, Lexus is facing another set of challenges at the top of the market, where the Germans have again unleashed another proliferation of new models including four door coupes, coupey-SUV things and sports cars.
Audi introduced the A7 and R8, the Q7 will be redesigned soon and there are rumors of an X6-type crossover, as well as R4 sportscar.
BMW just finished up the second generation 6 series, is introducing the 6 Series GC, and of course has the X6.
Mercedes just redesigned the ML and CLS, will shortly redesign the GL, and plans to add new four door coupes and suv-coupes in the next year. SLS can be looped in here as well. E class coupe is another consideration.
Lexus has the high-priced, low volume LX which sells in very limited quantities and the GX, which has a somewhat broader appeal than the LX, but still struggles with buyers outside it's loyal existing fanbase. GS will be all-new next year, ISF is low volume and the SC is dead. This leaves the LS as the only Lexus that sells reliably, consistently in the higher-end space. (Disclaimer: I am not saying that products like the 6 series or X6 sell any better!)
Lexus has no four door coupes, nothing to compete with the X5 or other sporty unibody SUVs, no high end X6-esque CUV, and no reasonably priced sports car. As I love the LFA, at $375K and a 500 unit run, it is not exactly relevant here. I am not saying that Lexus needs to chase every segment, but I think it's important to acknowledge that Lexus is not keeping pace with the market - and this is now, THE market. These cars went from being one-off toys to segment leaders. Lexus needs to acknowledge this.
A few years ago, we looked at the first gen CLS and thought it was a one-off experiment from Mercedes that would fail to catch on. Now, it has spawned an entire segment with several different cars.
When the X6 was revealed, we all scoffed and said it was doomed. Now, it too has created an entirely new segment that continues to grow.
If you want to be technical, high-powered, fun to drive CUV/SUVs have been around longer than either of the above segments, and Lexus has yet to challenge the X5 or Cayenne.
Even though these niches are rather low volume, both at the low and high ends of the market, Lexus will continue to suffer if they do not diversify into these segments. Luxury is about excess and having options is a large part of this concept. In fact, I once read a quote that said something to the effect of, "True luxury is about having choices," which makes sense once you think about it a bit. In terms of product, we are watching BMW, Mercedes and even Audi pull away from other brands like Lexus, Infiniti, Acura and Cadillac who are sticking to more traditional product lineups. Lexus is already fighting the Japanese luxury fight nearly solo (in Tier 1, at least), and as the Germans continue to create new models and segments, Lexus fails to look "ready".
It used to be that if you wanted a midsize luxury sedan, you had one option from Lexus, one option from BMW, one option from Mercedes, etc. Now, you can walk into a Mercedes dealership and compare a CLS to an E Class, or to Audi and cross shop the A7 and A8. Soon, BMW will offer the same structure with the 5, 7 and 6GC. The GS is no longer competing against one car from each brand, as the competitive field has effectively doubled. No, they aren't exactly apples to apples, but there are plenty of folks going to a Mercedes dealership for an E550 and walking out with a CLS 550, and I'd venture to say this is happening at Audi with the A7, and will happen to BMW with the 6GC. The GS is the competitor to the standard sedan versions and many people don't really buy into the marketing hype of a 4 door coupe - it's simply, the midsize Mercedes or Audi, it just so happens that they offer two of them, and one is curvier than the other.
The "similar size, different flavor" approach of the sedan/4 door coupe markets also gives buyers a reason to stay in the family once they are ready to shop for a new car. Loved your E Class, but want something a little edgier? Try the CLS! Enjoyed your A6, but the kids finally left for college? Give the A7 a shot. This phenomenon does not speak only to sedans and 4 door coupes: as the gap between sedan and SUV is bridged, the lines are blurred even more. Want a little more ground clearance in something that still drives like your 5? Try the X6. See where I am going here? I have seen these types of buyer decisions play out several times in my circle of friends, neighbors and coworkers, and the point is that I think the Germans are doing a better job of keeping buyers in the brand by offering more product options.
One final thought - I think it looks bad for Lexus to be neglecting these segments. People look at the CLS and X6 and acknowledge that Lexus doesn't really offer anything comparable. To some, it might not matter because they aren't in the market for such a car. In terms of brand-building and image, and making people aspire to your brand, it most definitely matters.
I have said before that it will be difficult for Lexus to deviate from the GX/LX strategy because both are solid products and easy Toyota re-designs (4Runner and Land Cruiser), but I think the void created by a midsize, 3 row, V6/V8 CUV continues to grow. RX and GX cater to relatively specific markets: RX is very much a CUV from how it drives to how it looks. GX is very trucky. There is a space here for something in between them - a "move up" from the RX and a different flavor with better MPG and functionality and the GX. Think X5.
A small CUV is a must have. The RX is significantly bigger than the GLK and Q5, and there is a space for something smaller and starting around $30K.
I'd like to see Lexus introduce a four door coupe that served as a showcase for hybrid technology - V6 and V8 hybrid options, and perhaps an F model at the top end. Lexus is the hybrid leader and I think an emotional product, such as a four door coupe, woud be 1) a great way to showcase their prowess and 2) a good way to differentiate from the CLS and A7.
A $100-150K sports car would be a great way to make the tech and "know-how" from the LFA available to more people. As it stands now, the LFA is priced well away from the R8, SLS, 911, and others. I think it would be doable for Lexus to pull a nice V8 from the F line and put it into a lightweight sports car chassis. This would be a BIG win, especially following on the heels of the LFA.
I know that Lexus has an aging product line, but I do not think that is a significant part of the problem here. A lack of new product and a lack of product in general, are two different things. Akio mentions that there is an entirely new group of people responsible for the future of Lexus, so let's hope that they acknowledge some of these shortcomings and have quick plans to address them.
Last edited by MPLexus301; 10-25-11 at 08:47 AM.
10-25-11, 08:45 AM
#3
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I can't wait to here 1sicks lame responce on how were looking at this all wrong and how Lexus is the best the thing since slice bread, and how everything audi is 4 cylinder and looks the same. and how its the only reliable brand etc... lol
10-25-11, 08:51 AM
#4
great write up. a lot of good points and things that lexus should look at and serious consider. even on the LS sales, i think in 07 they were astonishing, but over the past few years they have dropped back quite a bit. so the LS is kind of in the "can't wait" mode as well.
it's sometimes a tough call. unless you can secure the market well with the more traditional lineup, it's hard for you to expand further to the more niche models. in some way that's what lexus is facing.
but on the other hand one thing you said very true is what luxury is about, all the excess and options. in that department, lexus is lacking quite a bit compared to mb and bmw, especially if you move up the chain to the more flagship level. i think that's something lexus can improve to build up the "cool" factor for high end buyers.
for the sport segment, i think lexus is growing, i guess they just need time. to be fair, even audi is still trying to get there with the rs series imho. it's good, but still have image factor to build up. same thing on lexus with the f line
i think another way to look at it is lexus needs to continue find way to keep their lineup "interesting" and "fun". i am not talking about driving, i am talking about attracting buyers to come and buy / trade. over the past years what i notice is lexus sales on models are spikes. the sudden jumps tell me that lexus cars are interesting, people want it!!!!!!!!!! but the problem is how they keep the car fresh and continue to make it fun. on that, i think some competitors are better. for example just look at the s class. a lot of updates, changes, even down to electronics. those are all ways to help feel your product fresh.
brand loyalty that's just something you build over the years with continuous interesting products
it's sometimes a tough call. unless you can secure the market well with the more traditional lineup, it's hard for you to expand further to the more niche models. in some way that's what lexus is facing.
but on the other hand one thing you said very true is what luxury is about, all the excess and options. in that department, lexus is lacking quite a bit compared to mb and bmw, especially if you move up the chain to the more flagship level. i think that's something lexus can improve to build up the "cool" factor for high end buyers.
for the sport segment, i think lexus is growing, i guess they just need time. to be fair, even audi is still trying to get there with the rs series imho. it's good, but still have image factor to build up. same thing on lexus with the f line
i think another way to look at it is lexus needs to continue find way to keep their lineup "interesting" and "fun". i am not talking about driving, i am talking about attracting buyers to come and buy / trade. over the past years what i notice is lexus sales on models are spikes. the sudden jumps tell me that lexus cars are interesting, people want it!!!!!!!!!! but the problem is how they keep the car fresh and continue to make it fun. on that, i think some competitors are better. for example just look at the s class. a lot of updates, changes, even down to electronics. those are all ways to help feel your product fresh.
brand loyalty that's just something you build over the years with continuous interesting products
10-25-11, 09:01 AM
#5
Super Moderator
i think another way to look at it is lexus needs to continue find way to keep their lineup "interesting" and "fun". i am not talking about driving, i am talking about attracting buyers to come and buy / trade. over the past years what i notice is lexus sales on models are spikes. the sudden jumps tell me that lexus cars are interesting, people want it!!!!!!!!!! but the problem is how they keep the car fresh and continue to make it fun. on that, i think some competitors are better. for example just look at the s class. a lot of updates, changes, even down to electronics. those are all ways to help feel your product fresh.
10-25-11, 09:02 AM
#6
Has this been confirmed? I have heard rumors for a long time, but last year when the Lexus FireSide Chat logs were leaked, US dealers were begging for such a car which leads me to believe that nothing has been communicated to them about one.
Last edited by MPLexus301; 10-25-11 at 09:11 AM.
10-25-11, 09:11 AM
#7
There is nothing wrong with having a few core competencies, but the low/mid part of the sedan and SUV segment is the only space where Lexus is really actually succeeding - everywhere else they are merely existing or struggling. CT is new so we can see where it goes over time. IS and LS are older, so their sales have tapered off. The GS is about to be replaced. GX and LX are more niche products than they are mainstream. SC is dead. LFA is irrelevant for sales.
A few months ago I made a post - "Why Lexus Needs a Camry" - that outlined why I thought their strategy with ES, RX, GX, LX vs. IS, GS, LS was flawed, and I continue to feel the same way. To an extent, Lexus takes what Toyota gives them (chasses and engines) and trys to make the best of it, then slaps an L badge on the front. There needs to be more of a focus on building models as a Lexus from the ground up, and more incentive to deviate from the Toyota architecture. Lexus needs their own theoretical "Camry" - a RWD plaform that can support V6, V8, hybrid tech, and a sophisticated AWD system. Lexus doesn't allocate enough resources to IS, GS, LS, (and non existentent midsize RWD SUV) for them to succeed like they should.
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10-25-11, 09:32 AM
#8
Lexus Fanatic
iTrader: (20)
^^ re: lexus needing their own unique models and platforms, the CT, LS, GS, and IS are all unique model/platforms aren't they?
and besides lexus' challenge from euro brands, while we can scoff at hyundai today, it will only get better, plus chinese and indian brands will come on strong in the next 10 years.
and besides lexus' challenge from euro brands, while we can scoff at hyundai today, it will only get better, plus chinese and indian brands will come on strong in the next 10 years.
10-25-11, 09:33 AM
#9
Lexus Fanatic
iTrader: (20)
making this personal is not appropriate. please do not continue with posts like this.
10-25-11, 09:40 AM
#10
I don't have a problem with the IS/GS/Crown relationship...it's RWD and supports their best engines
10-25-11, 09:46 AM
#11
Guest
Posts: n/a
A few years ago, I made a post asking how long Lexus could remain #1 in US sales in the face of a German product onslaught at the bottom end of the market: 1 Series, A3, Q5, GLK, etc. Lexus recently responded with the CT which has been a successful product, even despite production issues created by the tsunami earlier this year. The HS was an earlier shot at this market, but failed.
This year, Lexus will obviously be overtaken in the sales race and the Germans are showing no signs of relenting: A and B classes are closer to fruition, A3 will spawn several new models in its next generation, Q3 is coming next year, 1 Series looks like it will also be offered in new variants and there are always rumors of an X2 and X4 waiting in the wings.
Lexus will continue to lose sales here for the forseeable future, especially without a small SUV.
With this considered, Lexus is facing another set of challenges at the top of the market, where the Germans have again unleashed another proliferation of new models including four door coupes, coupey-SUV things and sports cars.
Audi introduced the A7 and R8, the Q7 will be redesigned soon and there are rumors of an X6-type crossover, as well as R4 sportscar.
BMW just finished up the second generation 6 series, is introducing the 6 Series GC, and of course has the X6.
Mercedes just redesigned the ML and CLS, will shortly redesign the GL, and plans to add new four door coupes and suv-coupes in the next year. SLS can be looped in here as well. E class coupe is another consideration.
Lexus has the high-priced, low volume LX which sells in very limited quantities and the GX, which has a somewhat broader appeal than the LX, but still struggles with buyers outside it's loyal existing fanbase. GS will be all-new next year, ISF is low volume and the SC is dead. This leaves the LS as the only Lexus that sells reliably, consistently in the higher-end space. (Disclaimer: I am not saying that products like the 6 series or X6 sell any better!)
Lexus has no four door coupes, nothing to compete with the X5 or other sporty unibody SUVs, no high end X6-esque CUV, and no reasonably priced sports car. As I love the LFA, at $375K and a 500 unit run, it is not exactly relevant here. I am not saying that Lexus needs to chase every segment, but I think it's important to acknowledge that Lexus is not keeping pace with the market - and this is now, THE market. These cars went from being one-off toys to segment leaders. Lexus needs to acknowledge this.
A few years ago, we looked at the first gen CLS and thought it was a one-off experiment from Mercedes that would fail to catch on. Now, it has spawned an entire segment with several different cars.
When the X6 was revealed, we all scoffed and said it was doomed. Now, it too has created an entirely new segment that continues to grow.
If you want to be technical, high-powered, fun to drive CUV/SUVs have been around longer than either of the above segments, and Lexus has yet to challenge the X5 or Cayenne.
Even though these niches are rather low volume, both at the low and high ends of the market, Lexus will continue to suffer if they do not diversify into these segments. Luxury is about excess and having options is a large part of this concept. In fact, I once read a quote that said something to the effect of, "True luxury is about having choices," which makes sense once you think about it a bit. In terms of product, we are watching BMW, Mercedes and even Audi pull away from other brands like Lexus, Infiniti, Acura and Cadillac who are sticking to more traditional product lineups. Lexus is already fighting the Japanese luxury fight nearly solo (in Tier 1, at least), and as the Germans continue to create new models and segments, Lexus fails to look "ready".
It used to be that if you wanted a midsize luxury sedan, you had one option from Lexus, one option from BMW, one option from Mercedes, etc. Now, you can walk into a Mercedes dealership and compare a CLS to an E Class, or to Audi and cross shop the A7 and A8. Soon, BMW will offer the same structure with the 5, 7 and 6GC. The GS is no longer competing against one car from each brand, as the competitive field has effectively doubled. No, they aren't exactly apples to apples, but there are plenty of folks going to a Mercedes dealership for an E550 and walking out with a CLS 550, and I'd venture to say this is happening at Audi with the A7, and will happen to BMW with the 6GC. The GS is the competitor to the standard sedan versions and many people don't really buy into the marketing hype of a 4 door coupe - it's simply, the midsize Mercedes or Audi, it just so happens that they offer two of them, and one is curvier than the other.
The "similar size, different flavor" approach of the sedan/4 door coupe markets also gives buyers a reason to stay in the family once they are ready to shop for a new car. Loved your E Class, but want something a little edgier? Try the CLS! Enjoyed your A6, but the kids finally left for college? Give the A7 a shot. This phenomenon does not speak only to sedans and 4 door coupes: as the gap between sedan and SUV is bridged, the lines are blurred even more. Want a little more ground clearance in something that still drives like your 5? Try the X6. See where I am going here? I have seen these types of buyer decisions play out several times in my circle of friends, neighbors and coworkers, and the point is that I think the Germans are doing a better job of keeping buyers in the brand by offering more product options.
One final thought - I think it looks bad for Lexus to be neglecting these segments. People look at the CLS and X6 and acknowledge that Lexus doesn't really offer anything comparable. To some, it might not matter because they aren't in the market for such a car. In terms of brand-building and image, and making people aspire to your brand, it most definitely matters.
I have said before that it will be difficult for Lexus to deviate from the GX/LX strategy because both are solid products and easy Toyota re-designs (4Runner and Land Cruiser), but I think the void created by a midsize, 3 row, V6/V8 CUV continues to grow. RX and GX cater to relatively specific markets: RX is very much a CUV from how it drives to how it looks. GX is very trucky. There is a space here for something in between them - a "move up" from the RX and a different flavor with better MPG and functionality and the GX. Think X5.
A small CUV is a must have. The RX is significantly bigger than the GLK and Q5, and there is a space for something smaller and starting around $30K.
I'd like to see Lexus introduce a four door coupe that served as a showcase for hybrid technology - V6 and V8 hybrid options, and perhaps an F model at the top end. Lexus is the hybrid leader and I think an emotional product, such as a four door coupe, woud be 1) a great way to showcase their prowess and 2) a good way to differentiate from the CLS and A7.
A $100-150K sports car would be a great way to make the tech and "know-how" from the LFA available to more people. As it stands now, the LFA is priced well away from the R8, SLS, 911, and others. I think it would be doable for Lexus to pull a nice V8 from the F line and put it into a lightweight sports car chassis. This would be a BIG win, especially following on the heels of the LFA.
I know that Lexus has an aging product line, but I do not think that is a significant part of the problem here. A lack of new product and a lack of product in general, are two different things. Akio mentions that there is an entirely new group of people responsible for the future of Lexus, so let's hope that they acknowledge some of these shortcomings and have quick plans to address them.
This year, Lexus will obviously be overtaken in the sales race and the Germans are showing no signs of relenting: A and B classes are closer to fruition, A3 will spawn several new models in its next generation, Q3 is coming next year, 1 Series looks like it will also be offered in new variants and there are always rumors of an X2 and X4 waiting in the wings.
Lexus will continue to lose sales here for the forseeable future, especially without a small SUV.
With this considered, Lexus is facing another set of challenges at the top of the market, where the Germans have again unleashed another proliferation of new models including four door coupes, coupey-SUV things and sports cars.
Audi introduced the A7 and R8, the Q7 will be redesigned soon and there are rumors of an X6-type crossover, as well as R4 sportscar.
BMW just finished up the second generation 6 series, is introducing the 6 Series GC, and of course has the X6.
Mercedes just redesigned the ML and CLS, will shortly redesign the GL, and plans to add new four door coupes and suv-coupes in the next year. SLS can be looped in here as well. E class coupe is another consideration.
Lexus has the high-priced, low volume LX which sells in very limited quantities and the GX, which has a somewhat broader appeal than the LX, but still struggles with buyers outside it's loyal existing fanbase. GS will be all-new next year, ISF is low volume and the SC is dead. This leaves the LS as the only Lexus that sells reliably, consistently in the higher-end space. (Disclaimer: I am not saying that products like the 6 series or X6 sell any better!)
Lexus has no four door coupes, nothing to compete with the X5 or other sporty unibody SUVs, no high end X6-esque CUV, and no reasonably priced sports car. As I love the LFA, at $375K and a 500 unit run, it is not exactly relevant here. I am not saying that Lexus needs to chase every segment, but I think it's important to acknowledge that Lexus is not keeping pace with the market - and this is now, THE market. These cars went from being one-off toys to segment leaders. Lexus needs to acknowledge this.
A few years ago, we looked at the first gen CLS and thought it was a one-off experiment from Mercedes that would fail to catch on. Now, it has spawned an entire segment with several different cars.
When the X6 was revealed, we all scoffed and said it was doomed. Now, it too has created an entirely new segment that continues to grow.
If you want to be technical, high-powered, fun to drive CUV/SUVs have been around longer than either of the above segments, and Lexus has yet to challenge the X5 or Cayenne.
Even though these niches are rather low volume, both at the low and high ends of the market, Lexus will continue to suffer if they do not diversify into these segments. Luxury is about excess and having options is a large part of this concept. In fact, I once read a quote that said something to the effect of, "True luxury is about having choices," which makes sense once you think about it a bit. In terms of product, we are watching BMW, Mercedes and even Audi pull away from other brands like Lexus, Infiniti, Acura and Cadillac who are sticking to more traditional product lineups. Lexus is already fighting the Japanese luxury fight nearly solo (in Tier 1, at least), and as the Germans continue to create new models and segments, Lexus fails to look "ready".
It used to be that if you wanted a midsize luxury sedan, you had one option from Lexus, one option from BMW, one option from Mercedes, etc. Now, you can walk into a Mercedes dealership and compare a CLS to an E Class, or to Audi and cross shop the A7 and A8. Soon, BMW will offer the same structure with the 5, 7 and 6GC. The GS is no longer competing against one car from each brand, as the competitive field has effectively doubled. No, they aren't exactly apples to apples, but there are plenty of folks going to a Mercedes dealership for an E550 and walking out with a CLS 550, and I'd venture to say this is happening at Audi with the A7, and will happen to BMW with the 6GC. The GS is the competitor to the standard sedan versions and many people don't really buy into the marketing hype of a 4 door coupe - it's simply, the midsize Mercedes or Audi, it just so happens that they offer two of them, and one is curvier than the other.
The "similar size, different flavor" approach of the sedan/4 door coupe markets also gives buyers a reason to stay in the family once they are ready to shop for a new car. Loved your E Class, but want something a little edgier? Try the CLS! Enjoyed your A6, but the kids finally left for college? Give the A7 a shot. This phenomenon does not speak only to sedans and 4 door coupes: as the gap between sedan and SUV is bridged, the lines are blurred even more. Want a little more ground clearance in something that still drives like your 5? Try the X6. See where I am going here? I have seen these types of buyer decisions play out several times in my circle of friends, neighbors and coworkers, and the point is that I think the Germans are doing a better job of keeping buyers in the brand by offering more product options.
One final thought - I think it looks bad for Lexus to be neglecting these segments. People look at the CLS and X6 and acknowledge that Lexus doesn't really offer anything comparable. To some, it might not matter because they aren't in the market for such a car. In terms of brand-building and image, and making people aspire to your brand, it most definitely matters.
I have said before that it will be difficult for Lexus to deviate from the GX/LX strategy because both are solid products and easy Toyota re-designs (4Runner and Land Cruiser), but I think the void created by a midsize, 3 row, V6/V8 CUV continues to grow. RX and GX cater to relatively specific markets: RX is very much a CUV from how it drives to how it looks. GX is very trucky. There is a space here for something in between them - a "move up" from the RX and a different flavor with better MPG and functionality and the GX. Think X5.
A small CUV is a must have. The RX is significantly bigger than the GLK and Q5, and there is a space for something smaller and starting around $30K.
I'd like to see Lexus introduce a four door coupe that served as a showcase for hybrid technology - V6 and V8 hybrid options, and perhaps an F model at the top end. Lexus is the hybrid leader and I think an emotional product, such as a four door coupe, woud be 1) a great way to showcase their prowess and 2) a good way to differentiate from the CLS and A7.
A $100-150K sports car would be a great way to make the tech and "know-how" from the LFA available to more people. As it stands now, the LFA is priced well away from the R8, SLS, 911, and others. I think it would be doable for Lexus to pull a nice V8 from the F line and put it into a lightweight sports car chassis. This would be a BIG win, especially following on the heels of the LFA.
I know that Lexus has an aging product line, but I do not think that is a significant part of the problem here. A lack of new product and a lack of product in general, are two different things. Akio mentions that there is an entirely new group of people responsible for the future of Lexus, so let's hope that they acknowledge some of these shortcomings and have quick plans to address them.
I just don't agree with the X6 point/market. They are going to have to make quicker decisions and expand. There have been hints at some of what you stated (GS coupe/small CUV) so we shall see.
Mike and I have talked about this in person and on the phone, not just cowering behind the internet.
10-25-11, 09:49 AM
#12
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I think the lack of a new SC or even LS-based coupe really hurts the overall excitement level for the brand.
I'm hoping Lexus really makes their next coupe special. The orignal SC was what got me hooked on the brand in the first place. I really dug the SC430, but it's design wasn't as captivating as its predecessor.
As far as sales goes, I'm actually happy to see the Germans overtake Lexus. I think Lexus and Toyota grew complacent with thier number one status. It wasn't so much that their products weren't as good (even though build quality took a step back), it was that they allowed the others to catch up on quality and reliability in some instances.
And I know my opinion on this is likely to be a small minority here on clublexus, but I think Lexus chasing after the sports/sporty segment is a mistake. That's not to say the LFA and IS-F aren't great cars (they certainly are), but Lexus was always about a quiet perfection that allowed you to take a break from the stress of the world. Lexus can keep making performance offerings, but they shouldn't think every model has to be some boy-racer that caters more to car magazine editors than the buying public.
Mainly I think Lexus needs to focus on what it is, and not what it isn't.
I'm hoping Lexus really makes their next coupe special. The orignal SC was what got me hooked on the brand in the first place. I really dug the SC430, but it's design wasn't as captivating as its predecessor.
As far as sales goes, I'm actually happy to see the Germans overtake Lexus. I think Lexus and Toyota grew complacent with thier number one status. It wasn't so much that their products weren't as good (even though build quality took a step back), it was that they allowed the others to catch up on quality and reliability in some instances.
And I know my opinion on this is likely to be a small minority here on clublexus, but I think Lexus chasing after the sports/sporty segment is a mistake. That's not to say the LFA and IS-F aren't great cars (they certainly are), but Lexus was always about a quiet perfection that allowed you to take a break from the stress of the world. Lexus can keep making performance offerings, but they shouldn't think every model has to be some boy-racer that caters more to car magazine editors than the buying public.
Mainly I think Lexus needs to focus on what it is, and not what it isn't.
10-25-11, 09:59 AM
#13
I really hope you are right! My next car will be a CUV or wagon 5 door of some sort and at the moment, outside of a used RXh, Lexus doesn't have much I'm interested in. C'mon lexussss!
10-25-11, 10:41 AM
#14
you have head of Lexus EU mention it 10 times so far in official interviews, indirectly... but obviously it will not be official until it is actually released. But it is coming and probably based on Rav4.
10-25-11, 11:11 AM
#15
I think Lexus have an inherent disadvantage in this compared with Benz and the other Euros, while we can say that in Europe & some other countries, they sell the diesel/low hp versions of the S-class and that constitute the majority of their sales, but that sales volume generated by those cars makes it worthwhile for them to keep updating them frequently with fresh new stuff, they can spread the cost of adding these new stuff over a much larger volume. But Lexus hasn't cracked the diesel markets in many parts of the world and they have no low hp versions with their high end cars like the LS, so from an economies of scale point of view, they are at a disadvantage here.