Lexus struggling on home turf, still not ready to give up

Posted: March 25th, 2008
Filed under: Industry News, Lexus
Lexus struggling in its home turf, still not ready to give up

Ever since its launch in the U.S. market in 1989, Lexus has enjoyed a lot of success with the Americans becoming a top selling brand by 2000. But the brand has been struggling in its home market ever since it was launched there three years ago. Luxury buyers in the Japanese market seem to be more interested in foreign brands, mainly German marquees like BMW, Audi and Mercedes-Benz.

By the time Lexus arrived in Japan, German brands had dominated the luxury segment, leaving Lexus in the dust. Lexus reached only 60% of Toyota’s initial sales projections to date.

In 2007, Lexus sold 34,800 units, a number very close to what it sold in the U.S. in December alone. According to BusinessWeek, a big problem is Lexus’ initial lineup. Toyota’s luxury brand launched in Japan with just three models: the GS sports sedan, the SC convertible (which we think is totally hideous) and the entry-level IS. All three models had been previously available in Japan under the Toyota badge for around 20 percent less than their Lexus siblings.

Still, Toyota, which owns 45% of the car market in Japan, refuses to give up on Lexus. The number one Japanese automaker has built 160 Lexus dealerships at an estimated cost of $10 million and has bought tons of prime-time TV ad spots. Toyota also launched the Lexus flagship, the LS Sedan, to its Japanese lineup in September of ‘06. The model accounted for more than half of Lexus sales in its home market.

We wish you the best of luck Lexus. Keep your head up.

 

Source: BusinessWeek

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One Response to “Lexus struggling on home turf, still not ready to give up”

  1. I.Nelson Says:

    March 27th, 2008 at 8:39 pm
    Visit I.Nelson

    I think it’s harder for the average Japanese person to enter a Lexus dealer out of fear of being rejected. I have a new 2008, and everyone just goes nuts and say how rich I must be, which I am definitely not. Toyota is not going for the average consumer here. I used to joke about Lexus when I used to go back home in the U.S.A. Lexus was a big deal for them, but I knew that they were actually autos that already existed in Japan, and were not that special. That will not work here in Japan because you cannot get a Lexus from a dirty 1 room discount dealer. You can get a Mercedes, or BMW from one though. When you go to a Lexus dealer, you feel you have to dress up. I did the first few times. I was lucky to be a non-japanese buyer. I’m expected to be different. But, I was also lucky to get a fantastic salesman who bent over backwards to ensure my satisfaction. And yes, everybody looked at me as I exited the dealer(must be somebody famous)! The only way for Lexus to dominate in Japan, is to change all of the Toyota emblems to Lexus, and lower the price. Believe me when I say, that’s not going to happen anytime soon. The one thing that used to be special about driving a foreign car in Japan was that the steering wheel was on the opposite side. Even a raggedy old Buick was somewhat of a status symbol. It was the steering wheel that set you apart from the ordinary driver. I really don’t think Lexus will ever sell well to the general public here, until Lexus loses the ’snob’ image. Yet, it is without a doubt, one of the best cars I’ve ever driven in my life.


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