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New Lexus Aust chief says brand ‘can do better’

Riding high: While SUVs such as its best-selling NX are proving to be sales winners, new Lexus Australia boss Peter McGregor says its sedan range could do better.

Image improvements required for Lexus, led by sexy new models

3 Mar 2016

LEXUS Australia’s newly appointed chief executive Peter McGregor has outlined several ways the brand can improve, while also forecasting another record-sales year, in his first interview since being appointed to the role on January 1.

Mr McGregor moved from a Toyota product planning role to replace Sean Hanley who led Lexus Australia for three years. He spoke with GoAuto at the national media launch of the GS F in Adelaide, Lexus’ first new car launch of the year and its ninth launch within 12 months.

“We’ve had a record year last year, maybe 12 per cent above the previous record, so the brand’s got real momentum,” said Mr McGregor.

“(But) I’ve said to my guys that Sean’s record shouldn’t last, as good as it is. I would like to think we can end the year with a volume higher than last year, but it has to be achieved in a balanced and responsible manner. We don’t want to be out there buying volume.”

Mr McGregor acknowledged, however, that the brand’s record volume largely fell on the back of the success of its most recent SUV addition, the compact NX.

Compared with 2014, in 2015 total Lexus sales volume soared 24.2 per cent to 8691 units.

The NX found 2922 homes in its first full year on sale, replacing the IS mid-size sedan as the brand’s top seller. The IS accumulated 2036 sales, falling 24.2 per cent compared with the year prior, while the ES and GS large sedans dropped 40.9 per cent and 45.5 per cent respectively.

“There’s no doubt that the success last year was based on the success of the SUV line-up,” added Mr McGregor.

“NX led the way, (new-generation) RX came at the end of the year, (facelifted) LX came at the end of the year as well.

“I think you can always look at the various model line-ups and say ‘I think that car can do a bit better'. Clearly some of the passenger cars can do better and that’s what we’ll need to focus on.

“But if you look at the luxury market, the SUV segment is doing very well, I think in general sedans aren’t probably doing quite as well … but certainly we can do better there.”

 center imageLeft: Lexus chief executive Peter McGregor

Mr McGregor does not believe current pricing and equipment levels are affecting sales of the Lexus passenger-car range, despite agreeing with the assertion that German rivals Audi, BMW and Mercedes-Benz are becoming more aggressive with value.

“You look across the range with Lexus and the equipment that each model offers for the price that it asks is pretty good,” he said.

“We want to be mindful of what our competitors are doing. Australia is a very competitive marketplace and you always expect the unexpected for competitors to do something.

“I think we have our eye on the market and we, on a regular basis, have what we would consider to be appropriate offers to that market. I don’t think it’s a concern. The fact that competitors are making competitive offers is par for the course.”

Mr McGregor instead said he believes lingering brand image issues are holding Lexus back.

“I think there is still some work to be done in terms of strengthening the overall brand (and) I think especially our traditional competitors are still quite strong in this area,” he continued.

“Lexus has improved over the years, but there is still some work to be done and frankly that work is not going to be completed even in the short term. This is going to be an ongoing discussion, an ongoing challenge, an ongoing focus that we’ll have I suspect over the medium to long term.”

Mr McGregor nominated the styling cues of next-generation models, beginning with the LC large luxury coupe, and supporting advertising and sponsorships as ways the brand will continue to transform its image.

“There will be a number of elements, it won’t be solely based on one thing,” said Mr McGregor.

“From a product point of view, I think you can start with the next product we’ll be speaking about which is the LC.

“If you look at the styling of that vehicle which was so faithful to the concept car that was first released, it was just a beautiful vehicle, absolutely stunning, and it gives cues, some direction, some indication of the underlying intent of the next iteration of design language of Lexus, which will be one of the key elements continuing to strengthen the brand.”“Clearly our advertising continues to need to be leading edge,” he added.

“If you look back at advertising over the past 18 months or so, Lexus campaigns have stood out in a good way. They have been attention getting … they have appropriately positioned the brand.

“Our various sponsorships have worked well for us, not least our continuing engagement with V8 Supercars (and) we’re very happy with that association.”

Lexus used the national media launch of the GS F to reveal the GS F official medical car for the 2016 season of V8 Supercars, supporting the RC F in its role as safety car.

However, as with his predecessor, Sean Hanley, he again ruled out participation in the motorsport series to be known as ‘Supercars’ from next year.

“We’ve already said that we’re not at this stage going to enter into the 2017 (V8 Supercars season) under the regulation changes,” said Mr McGregor.

“It’s unwise to rule things out ever, so we won’t rule it out forever and we may take a look at it again after a period of time that the regulation changes have been in place, but at this stage our decision regarding participation in 2017 remains unchanged.”

This is despite the GS F conforming to the configuration required by current V8 Supercars rules, having a four-door sedan bodystyle and naturally aspirated V8 engine in production form. However, the recent introduction of the GS F will not reignite discussion internally.

“We knew that GS F was coming, so all that was factored into the consideration set at that point in time,” revealed Mr McGregor.

“So that (GS F) didn’t change our point of view at all in terms of what to do in the short term.”

Mr McGregor instead will look to continuing to improve the brand with the 2017 launch of the LC, a competitor to the Bentley Continental and BMW 6 Series that will be offered to Lexus Australia with petrol V8 or hybrid power.

“My expectation is that that’s the premium coupe, it’s the next iteration of design language for Lexus, it starts to speak about where Lexus is going in its next stage of development,” he opined.

“I expect it will strengthen our brand, it is a stunning looking car.”

However, he would not be drawn into suggestions the LC would become the most expensive Lexus on the market above the $240,610 LS600hL limousine that currently holds the title.

“I think even the designation, if you look at LX, LS and LC, it speaks of the overall positioning of the car in its various bodystyle segments,” he said.

“It is a two-door coupe, so it will sit in its sub-segment in the same way that LS sits in sedan and LX sits in SUV. Whether it (LC) sits above (LS) in price point, it will ultimately depend on final specifications.”

The newly appointed chief executive reiterated, however, that whatever advances the brand makes, Lexus must above all else continue to play to its traditional brand strength and continue to enhance the ownership experience.

“Probably the key thing for all of us is how we continue advancing the customer experience when they buy a car,” Mr McGregor said.

“That continues to be very important to us. In everything else we are doing, we cannot lose sight of the key underlying element of our brand, which in fact is how our dealers treat our customers”.

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