A DECADE OF SUCCESS PREPARES LEXUS FOR CONTINUED GROWTH IN EUROPE
A decade ago, Lexus arrived among the world’s established luxury car makers with a dramatic new product and a totally new concept, as Toyota introduced Lexus as a separate brand, with the philosophy of ‘the relentless pursuit of perfection’.
That translated into offering customers exclusivity, intelligent design, integrity, attention to detail and the highest standards of customer service. The original launch of the marque in the USA came with the debut of LS 400 ‘premium luxury sedan’ When it came to market in 1989, it redrew the map of the luxury segment overnight. Its unique quality, refinement and quietness was matched to an unprecedented level of customer service. It quickly became the benchmark. By 1993, Lexus had become the No.1 luxury import brand, and had earned the reputation of selling luxury cars at a value price and setting new standards of customer satisfaction.
Extra emotion was injected into the brand with the introduction of high performance sports sedans, and a new marketing approach was introduced : the ‘Relentless Pursuit of Exhilaration’. Lexus was branching out, presenting new but still true Lexus products. For the 1999 model year, Lexus became the first luxury brand to offer a distinct sport utility vehicle (SUV) with the RX 300.
The RX 300, which is now the best-selling SUV in America, helped push Lexus sales in the US up to 185,890 units, an increase of 19% on the previous year. A similar level of growth is expected for Lexus in the USA for year 2000.
Lexus In Europe
In Europe too, Lexus is growing rapidly. From small beginnings in 1990, volumes have multiplied 15 times over.
The most astounding growth has been in the past two years. The introduction of desirable new models such as the latest GS 300 and IS 200, have boosted sales from 3,500 in 1997, to 7,347 in 1998 and 16,308 in 1999. And the first half of 2000 (Jan.-June) indicates a continued rise, with almost 9000 units sold.
“As you’d expect, we are delighted with our growth over the past years, but this is really only a start” said John Howett, Vice President of the Lexus Brand in Europe. “The next growth phase starts now with the enhanced product portfolio – offering the customer a complete range of exciting new models. Just look at Paris Motorshow, where we are showing three addition to our range: the RX 300, the GS 430 and the SC430 which is also bound for Europe.”
“Europe is the most challenging market for a new premium car brand. European consumers are very much influenced by heritage. Lexus, being a new brand, appeals mainly to self-confident people, who make their purchase choice based on product attributes benefits and value (‘early adopters’ as they are known in the marketing world.)”
“But that is not the only reason why the US-market was more receptive : Lexus was launched with a bigger portfolio of models in the States. It demonstrates our need to compete in more segments. And that is exactly what we are moving towards today, with an expansion of both our model-line up and our engine-range.”
Unlike some rival luxury marques which feature model ranges which grow organically in size, sometimes with overlapping identities, Howett sees each individual Lexus model as an individual product, each appealing to a different group of customers.
“The LS 430 is our flagship. We expect that it will become the new reference, as the original LS400 did 10 years ago. It is of course a premium product, but there is still volume in that segment” said Howett. “Currently the IS and GS models account between them for 80% of the total volume of Lexus sales. And RX gives us a chance to enter a completely new market segment, where competition is still scarce.
“Lexus IS 200 has added a new dimension to the Lexus brand. Firstly in terms of volume and acceptance, it has made many more people aware of Lexus. It also brings passion and emotion to the brand. The GS 430 will attract customers upgrading from GS 300, as well as conquest customers from Mercedes E-Class, BMW 5-series and Jaguar The GS is a great offering a more progressive, a more individual choice.”
“We are a building Lexus into a true premium brand in every aspect both product and services. The launch of the RX 300, and in the future, the Lexus SC 430, will mean increased choice, increased volumes and therefore increased opportunity for dealers” Howett concluded. “From a business point of view Lexus is strong. Our expanding range of models means that the look and the feel of the Lexus brand has a more progressive feel. Awareness has grown and that is set to continue as more of our products are seen on the road. Satisfaction is amongst the highest in the industry and that is what we intend to develop this into an outstanding position in the near future.”
Exclusive Dealer Network is Vital
As important as the product, the Lexus network of exclusive dealers is perceived as pivotal to the growth of the Lexus brand in Europe. The intention is to increase the number of exclusive dealers, currently around 60, to between 225 and 250, across the 16 European countries.
(In comparison there are around 3,300 Toyota dealers).
‘Consolidation’ is Howett’s keyword. The selections will be made on the balance between maximum accessibility and the optimum business opportunity to allow dealers to properly invest in the facilities required.
“We want customers to enjoy the same experience across Europe” said Howett. “We intend to offer them a level of service that they have the right to expect as a purchaser of a premium product. Our dealers need to explain our product properly, offer open and transparent dealing. Together with our dealers want to make owning and driving a Lexus a pleasurable and memorable experience.”
In the future Lexus dealers will be stand-alone dealers with their own identity, separate from Toyota. “Of course they can share ‘back-shop’ links, taking advantage of parts and distribution operations, economies of scale, in the same way as for example Audi and VW operate” said Howett. “Lexus customers demand a different experience. Different salesmen, service technicians. Premium service that set’s the benchmark in the industry.”
“We are also looking at other ways to develop the ease of doing business with Lexus” said Howett. “For example how we can better use internet to better serve our customers the opportunity to preview car specifications. Review second hand pricing Internet service booking”.
“Experience from the USA clearly demonstrates that the ownership experience and and the level of customer service provided by dealers offer a significant opportunity to gain an advantage over many more established marques” said Howett. “Lexus is much more than a ‘me too’ player. It has developed in the USA and Europe, levels of customer service and customer satisfaction that are the highest in the industry. We are looking forward to raising those standards still higher and introducing them to yet more people.”