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Lexus to grow slow and steady

Looking ahead: Lexus Australia chief executive Sean Hanley expects sales growth of about 10 per cent from the by the end of the decade.

Viable expansion and more populist models to drive Lexus volume over next five years

9 Feb 2015

LEXUS is counting on sustainable and responsible sales growth of about 10 per cent annually over the next five years, as it places a greater emphasis on offering more desirable vehicles.

With a renewed focus on flourishing segments such as mid-size SUVs thanks to the new NX crossover, Toyota’s luxury marque is hoping to lure more first-time premium brand buyers more effectively than it has in the past.

Speaking at the NX 200t’s launch in Canberra last week, Lexus Australia chief executive Sean Hanley admitted his company had undergone extensive changes in recent years in order to better suit the local luxury vehicle landscape, but added that he expected continued growth.

“The luxury market will continue to grow, because as the economy strengthens, more people will find luxury more affordable,” Mr Hanley said.

“Luxury has no boundaries to affordability now – we call it the democratisation of luxury – and it starts pretty fiercely in the lower price brackets. Buyers are coming from the mainstream market… they’re stepping up. And Lexus is a credible alternative for them.

Backed up by the 2013 return of the affordable ES sedan and last year’s NX 300h hybrid SUV, Lexus’ volume aspirations will receive a shot in the arm in the form of the NX 200t’s all-new 2.0-litre four-cylinder turbo-petrol engine, which has been confirmed for other models such as the IS mid-size sedan and GS large car.

It is also expected to debut in the CT hatch and larger next-generation RX SUV over the next two years.

Mr Hanley said he hopes to increase sales in the most consistent and supportable way possible from last year’s 7000 units, to about 10,000 by the end of this decade.

“We now have a number of models in the growth segments, and we are now a real credible brand for consideration for step-up buyers, and that’s where I expect the growth of buyers for the luxury market is coming from. I’m always reticent to put a number on it, but I would expect five to 10 per cent growth each year for the next five years.

“It’s realistic. If being market leader is the only game you’re in, then you can do things to stimulate your product and market pretty quickly, but it’s short term. Lexus is not about that.” Mr Hanley said Lexus' marketing strategy and other factors, including the Free-Trade Agreement with Japan, will have an impact on overall sales.

“We are genuinely about sustainable growth, we’ve absolutely examined every aspect about our brand over the last two years, we’ve changed a lot of things, the way we market our product, the new products we’re bringing to market, the variations of products we’re bringing to market, our pricing strategies with the recent Free-Trade Agreement (between Australia and Japan) being passed on 100 per cent to offer further value – and we believe in that way we offer a good strong plan that is not short term that will bring us sustainable growth over an extended period of time.” Lexus volume in Australia has been in a 6000 to 7000-unit holding pattern for nearly a decade, with 2007’s 8199 sales result the sole exception.

Last year, in an expanding luxury vehicle segment, Lexus' total numbers edged up by only 1.2 per cent, against 20.1 per cent for Audi (achieving a record 19,227 sales), 15.8 per cent for Mercedes-Benz (also hitting new highs with 31,895 units although over 4800 were commercial vehicles) and 10.7 per cent for BMW (for a best-ever 22,722 sales).

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