The launch Tuesday of Toyota Motor Corp.’s Lexus LS model will be an important gauge of success for the Lexus marque in Japan’s fiercely competitive luxury car segment.
Although Toyota has repeatedly stressed it will a while before its new brand takes root here, Lexus has so far struggled to gain a foothold against imports such as BMW and Mercedes-Benz.
“Toyota launched the Lexus brand in hopes of luring customers away from rivals BMW and Mercedes, which dominate the (luxury auto) market in Japan,” said Shinji Kitayama, a senior analyst at Shinko Securities Co.
“But looking at the number of Lexus cars sold over the past year, I think the Lexus brand has not been successful so far.”
Toyota introduced the Lexus marque in Japan, comprising GS, IS and SC models, in August 2005. The aim is to move upmarket into high-margin luxury models as the auto market becomes increasingly split between such high-end cars and small, inexpensive ones.
The three Lexus models, however, are not selling as well as Toyota had hoped, making the release of its new LS flagship model all the more important.
Toyota sold about 10,300 Lexus cars between Aug. 30 and December last year in Japan, barely half its sales target of 20,000.
The automaker hopes to sell 30,000 this year, but this target also looks optimistic. Through the end of August, total Lexus sales stood at 15,079.
Toyota is banking on the LS, which will go for around 10 million yen, to help it make inroads in the luxury market.
Things may be looking up. Media reports say Toyota has already received about 9,000 advance orders for the LS.
“Our initial sales targets were a little too ambitious,” Toyota spokeswoman Yurika Motoyoshi admitted. But with the launch of the LS, and a hybrid version next spring, Toyota is banking on Lexus sales taking off.
“It takes three to five years to establish a new brand. We have to wait at least a year after the launch of the LS model to see how the Lexus cars will get along,” Motoyoshi said.
Having spent a reported 200 billion yen on the marque so far, analysts say Toyota won’t be able to claim success unless it manages to lure away a significant number of BMW and Mercedes-Benz buyers.
The German automakers haven’t been standing still. In 2005, BMW Japan Corp. saw sales rise 17 percent, year on year, to 44,980 vehicles, while DaimlerChrysler Japan Co. enjoyed a 17 percent rise in Mercedes-Benz sales to 45,852 vehicles.
The upswing for luxury carmakers has continued this year, with BMW logging an 8 percent rise and Daimler reporting an 11 percent increase for January to August, compared with year-ago figures.
Publicly, at least, the competitors of the Lexus seem to welcome its presence on their turf.
“The premium car market is not that big in Japan. Toyota’s entrance may have stimulated the market by prompting customers who used to favor Japanese cars to pay attention to foreign brands,” DaimlerChrysler Japan spokesman Naoto Domeki said.
BMW Japan also said it is glad to see the debut of the new Lexus model, which it hopes will stimulate public interest in the premium car segment.
“We have seen a 20 percent increase in the number of visitors to our BMW outlets” since the debut of the Lexus brand last year, said BMW Japan spokesman Yuichiro Ito.
Because many Lexus dealers — including 18 in Tokyo — are less than 1 km away from a BMW dealership, Ito said visitors to Lexus dealers tend to stop at its showrooms as well.
“We have to take advantage of this opportunity,” Ito said, adding that BMW Japan is encouraging its dealerships to provide customers more chances to test-drive its BMW 7 series, which compete directly against the Lexus LS.
Which raises the question of why the Lexus so far failed to catch fire in Japan.
Kitayama of Shinko Securities said owning a Lexus does not carry the same cachet as a BMW or a Mercedes.
Adam Moncrieff, who recently purchased a 16 million yen BMW M6 coupe, the top-of-the-line model in the BMW 6 series, may be able to offer some insights to Toyota.
Moncrieff, a 39-year-old lawyer from Australia, said Lexus cars are well-made but “boring.”
“There is nothing wrong with the brand,” he said, but Moncrieff did not consider buying a Lexus because Toyota does not have the type of cars he likes in its lineup.
If Toyota wants to make the Lexus brand more appealing to car enthusiasts like Moncrieff, “Toyota may need to consider developing a more (dynamic) car for each model in the range,” he said.
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