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Lexus takes aim at young buyers in Middle East

Bloomberg

Toyota Motor Corp.’s Lexus unit decided to open one of its three new global luxury concept stores in Dubai to cater to growth opportunities in the Middle East, where consumers are among the youngest in the world.

Dubai is one of the biggest growth markets for the Lexus and logged a 55 percent gain in sales last month, according to Mark Templin, executive vice president of global Lexus operations. New York and Tokyo are the other two cities where the brand will open its Intersect By Lexus lifestyle store, offering coffee and handcrafted consumer goods.

“In Saudi Arabia, the average Lexus customer is 32 years,” Templin said in a recent interview at the Intersect store in Tokyo’s upscale Aoyama district. “In other markets around the world, 32-year-olds don’t buy luxury cars.”

Toyota’s premium marque has been spending more on marketing in the past few years to ramp up its global presence, Templin said. The promotional push comes after Lexus lost the luxury sales crown for two straight years in its largest market, the United States, which accounts for about half of sales.

In Japan, Lexus is outsold by Daimler AG’s Mercedes-Benz, while Toyota suffered its first annual decline in China sales last year because of a consumer backlash triggered by a territorial dispute over the Senkaku Islands.

“Shanghai, Beijing were possible picks for opening the Intersect store, along with other global cities like London, but we want to be careful in our decisions,” Kiyotaka Ise, president of Lexus International, said during the same interview.

Lexus is building up a network of dealers in China and is expanding in the country with a “methodical approach,” Templin said, predicting sales growth for the brand this year.

Toyota delivered 32,000 Lexus models in China through June this year, according to industry researcher LMC Automotive. That compares with full-year sales of 60,000 units in 2012.

It now expects total sales in China, including the Lexus, to surpass 900,000 units this year.

In the U.S., its biggest market, Lexus sales gained 12 percent to 141,446 units in the first seven months, outperforming the growth of both BMW and Mercedes during the period, according to Woodcliff Lake, New Jersey-based industry researcher Autodata Corp.

Templin said Lexus has set a sales target of more than 500,000 units worldwide this year. Of this number, it hopes to sell 260,000 units in the U.S.