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

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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