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Sustainable growth, not niche-filling for Lexus

Helping hand: The addition of the IS350 to the Lexus range late last year has helped the brand achieve sales growth this year despite stock issues post-tsunami.

Lexus plans dealer network expansion as exciting new models start to emerge

7 Nov 2011

SALES of the Lexus CT200h premium compact hatch and big-bore IS350 sedan have helped the Japanese luxury brand stay in the black in the Australian market, despite losing about 1500 sales due to the March 11 earthquake and tsunami, placing it on track for strong growth in 2012 and beyond.

Sustaining that growth will be helped by next year's refresh of its model line-up, starting with the new GS luxury sedan and extending to comprehensive facelifts of the LX and, RX SUVs, IS executive sedan and LS luxury limousine, while measured growth of the dealer network will also help drive sales.

At the Australian reveal of the new GS in Melbourne last week, Lexus Australia chief executive Tony Cramb told GoAuto if it were not for the devastating natural disaster, 2011 would probably have been a record year for the brand in this country.

“It's amazing really,” he said. “We lost 1500 cars around the end of the financial year, which is our busiest time, but we are now slightly ahead of where we were last year – and if we (could make up for the lost sales) it would probably have been a record year for us, so we are in terrific shape.”

Mr Cramb, who said it would “not be long” before Lexus beats its 2007 sales record, expressed excitement about the new model pipeline beyond the GS and facelifted current models, some of which had been outlined to dealers but could not yet be shared with the media.

 center imageLeft: Lexus Australia chief executive Tony Cramb. Below: New Lexus GS.

As GoAuto has reported, Mr Cramb's predecessor John Roca has plans to double the number of Lexus dealerships in Australia to 48, but the plan went on hold since sales dived during the GFC.

At the CT200h launch in March Mr Cramb said he had “no plans for that to change” but the sales turnaround and an exciting product development plan have since changed his mind. “We've already spoken to our dealers about our plans and we will expand,” he said.

“But we will not get ahead of ourselves. We want sustainable, gradual growth rather than fast spurts. We want a few more dealers who we can make sure will look after our customers and that's where we differentiate ourselves – and we don't want to grow at the expense of that.”

Mr Cramb said he expected to sell a little over 6500 vehicles this year and official VFACTS figures show show Lexus to be on the right trajectory, up 0.7 per cent so far with 5092 sales to the end of October.

However the full story is told in the individual model figures, which reveal sales of every Lexus model except the CT200h and IS350 to be significantly down on last year.

Meanwhile, of the European luxury brands against which Lexus toils, BMW and Mercedes-Benz are down 7.2 per cent and 5.3 per cent respectively while Jaguar is 27.3 per cent behind on last year – and Mr Cramb said catching up with the Europeans is “definitely the plan”.

“I don't know if we'll catch them but we're definitely heading towards them,” he said. “Honestly speaking, volume is part of it but (Lexus) is more about a sustainable business that is well received by customers.

“We know there is a war on between BMW and Mercedes but we will not be doing volume for volume's sake, we will do what is legitimately there, we won't push the boundaries just so we can say we sold a certain number of cars – we are going to be running a good solid business.”

Mr Cramb described Audi – which continues to storm ahead with a 9.3 per cent increase in sales year-to-date – as “definitely a strong competitor” that is helped by the current stream of new models. “It's a cyclical business,” he said.

Lexus Australia marketing manager Peter Evans said the facelifted Toyota LandCruiser-based LX SUV is expected to debut at the Los Angeles or Detroit motor shows, with the RX SUV at Geneva and the LS limousine likely to be unveiled at Paris – although he could not suggest when the revised IS sedan might show up.

The brand has previously talked introducing seven new performance-oriented F Sport variants, the first of which will be 350 and 450h variants of the GS, with the same pattern likely to be followed by the RX.

Mr Evans suggested the revised LS would also come in two F Sport variants, bringing the total to six. “And the seventh one, well who knows,” he said.

For some time a compact SUV to sit below the RX in the range has been mooted and Mr Cramb – who has previously expressed a desire to see more SUVs in the Lexus line-up – acknowledged there were gaps in the Lexus line-up, although he suggested the brand would not get into the niche-filling that now typifies the German brands.

“There are clearly some opportunities for us to fill – and customers would like us to fill – that would bring volume and be profitable and that is where our focus lies at the moment,” he said.

“We'll have our own strategy so in terms of the direction for Lexus and we are not looking at what the Europeans do, we cannot control what they do.”

Mr Evans said should a sub-RX SUV come to pass it would be more BMW X3-sized than X1-sized and that the brand also desires a seven-seat Audi Q7 competitor.

“Maybe in Europe where they have a much finer segmentation between sizes you can sell X3s to a different customer than an X1 but I think in our market you’ll find they are largely substitutional so you’ll see a small SUV below RX and a large one above with three rows of seats.

“Nothing’s been confirmed, the three rows of seats we talk about regularly but once again there’s nothing on the cycle plan for a small SUV and I’m hoping that they’ll make some announcements eventually – again we’re talking about it but nothing confirmed for our market yet.”

Mr Evans added that the emergence of high-demand right-hand drive markets like India would hopefully lead to more models being engineered for RHD, resulting in Australia getting a wider variety of products.

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