Lexus tiptoes into worldwide markets

Mark Rechtin
Automotive News
January 27, 2014 - 12:01 am ET

DETROIT -- The Lexus brand has spread its wings in more than 90 countries worldwide. But that expansion is bringing new questions to resolve.

For example: How do you service all of Chile's Lexus vehicles with just one dealership?

Those are the issues facing Mark Templin, executive vice president for Lexus' international operations.

"We need to go at the right pace," Templin said in an interview at the Detroit auto show.

The brand is slowly rolling out in Central and South America, with one store each in Brazil, Chile, Peru and Panama. A Lexus store just opened in Ho Chi Minh City in Vietnam. Lexus is expanding in the sprawling Chinese market, and the broader Asia-Pacific region is also seen as ripe for growth.

But Lexus is still absent in India and Mexico, two fast-growing markets where regulations pose a hurdle.

"Every country is focused on emissions [targets] in different ways, whether it's CO2 or mpg or engine size. The question is, how do we blend that with Toyota Motor [global] numbers to get a CAFE in each market? It's changing our rollout plans," Templin said.

Based on lessons learned from Lexus' experience launching in the United States, the brand will have fewer stores in new markets than its luxury rivals. And in certain markets, as in Western Europe, some outlets will be service-only facilities. Other far-flung markets will have a Toyota dealership's service stall rented to the Lexus brand, or have a fully stocked service van go to the customer's home or office.

Adjusting to disparate market needs is nothing new for Lexus. After all, its two major markets -- the United States and Japan -- are very different. In Japan, dealers don't maintain inventories or discount prices. But the growing Chinese market is becoming more like the U.S. market, with incentives and haggling on the showroom floor. Central and South American dealers will stock small regional inventories, if only because customers may not be willing to wait months for a specific vehicle.

Templin tries to get as much face time in as many markets as possible. He spends two weeks of the month in Japan, one week in the United States and the other week in one of the other territories. He is a big proponent of sharing assets such as advertising and training materials among all Lexus operations on an internal Web site.

"I've been in the business 30 years, but when I talk to dealers all over the world, they are remarkably the same," Templin said. "They are smart, inquisitive businesspeople who want to improve."