The Lexus Global Strategy

Lexus, which has focused primarily on the American market since its inception in 1989, has been attempting to grow into the global brand, yet the results have been mixed. The Detroit News has a very interesting article on this topic:
In some of the most promising, fast-growing markets such as Russia and China, Lexus is off to a roaring start.
But it has been slow to gain traction in key regions, including its home market, Japan, where the brand sputtered after a grand introduction two years ago. Lexus missed its sales targets in Japan in 2005 and 2006, and demand is only now picking up after the rollout of a redesigned flagship LS sedan.
The biggest challenge, however, is Western Europe, the world's No. 1 luxury car market and home of the oldest premium marques. Last year, Lexus sold fewer than 37,000 vehicles in Europe -- a market comparable in size with the United States, where Lexus sold 322,000 cars and crossovers.
Even more telling is the article's accompanying graphic:

In the US, where Lexus is the best-selling luxury automotive brand, it's easy to mention BMW, Mercedes and Lexus in the same breath, but this can't be said of the rest of the world. It all comes down to conflicting viewpoints:
Americans prize comfort, reliability and attentive service -- the hallmarks of the Lexus brand. The Japanese revere heritage. Europeans want innovation above all...
Quite clearly, any success in Japan is going to take time, building history is not something that happens over night, obviously. However, Lexus' struggle in Europe is equal parts bafflingly/expected, for if these consumers look for innovation above all else, how is Lexus not more successful? Many points can be argued, but if Lexus is one thing, it's innovative. Perhaps, rather than innovation, Europeans value the driving experience, which is the one area Lexus trails behind brands like BMW.
Therein lies the real issue, whereas an automaker like Mercedes has been able to straddle the line between comfort and performance (how successfully, of course is an entirely separate issue), Lexus' main focus has always been comfort. Steps are being taken, considering the introduction of the IS-F, the upcoming LF-A, and the hint of a possible GS-F, but these cars have yet to be honestly compared to their peers. If anything, this performance line may be Lexus' best hope in establishing a strong presence in Europe, but nothing is guaranteed.
As I mentioned previously, the Detroit News article is exceptionally detailed, and I feel as though I've only scratched its surface. Highly recommended reading for any Lexus enthusiast.


















One other thing is, the European 'luxury' market also includes all those small hatchbacks and 2-seaters that Lexus, with its $30,000 floor, won't touch...so its volumes will remain lower than Mercedes, BMW, Audi in Europe. But overall there is strong potential for growth in many overseas markets.
BTW, what dealership is that top picture from? Looks very nice, dome and all.
Yes, Dan, I thought of that as well, with Lexus' having no plans to release a sub-$30,000 vehicle, it would be hard to match the European luxury car brands with their 1-Series and A-Classes. Really, that's Toyota's market.
I wonder what the numbers would look like if only like models were compared, 7-Series/S-Class/A7/LS, etc. Worldwide, I'm sure numbers would still favor the German manufacturers, but at a significantly different ratio than comparing the companies overall.
(The photo above is from Hendrick Lexus in Charlotte, North Carolina.)
Would be nice if Lexus will drop the prices for their '08 models. Here in Canada. They might make more sales that way. Plus would make other car manufactures do the same.
I'm not sure if going into a price war is a solution for Lexus (in Canada, as you requested). This will force the competitors to do the same, as you said. At the end, all the industry players will have to lower their service level in order to fit to their costs. The customer will not win anything eventually...
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