Market Insight: Lexus reaches 30-year milestone

LEXUS is celebrating 30 years of sales operations in Australia, pointing to product quality and a commitment to customer satisfaction as key reasons behind its longevity in this market.

The Japanese brand, once simply known as Toyota’s luxury division but now standing as a premium marque in its own right, has not had a boom-and-bust cycle that some other car-makers have suffered in Australia, and the various executives steering it over many years have often pointed to incremental sales growth and ensuring its dealer partners achieve a return on investment as priorities over sheer volume.

The company has nonetheless had mixed fortunes since arriving with the LS400 sedan in May 1990, and last year fell short of its hoped-for 10,000 sales over the full 12 months, although the 9612 registrations it recorded marked an all-time high for a brand that has posted year-on-year improvements for seven of the past eight years.

This year, as COVID-19 inflicts a serious blow to the industry, Lexus has limited the damage to a 14 per cent downturn as at the end of April compared to the overall market’s 21 per cent downward spiral over the same period.

The car-maker naturally has ambitions for ongoing growth post-pandemic, but upon reaching the 30-year milestone during May, when cumulative sales moved beyond 143,000 vehicles, Lexus has steered the conversation back to customer service initiatives and dealer partners that have led to high buyer retention rates and repeat purchases over the three decades.

This also relates to the increasingly younger and new-to-Lexus buyers walking into showrooms in recent years – drawn by more affordable models in popular (SUV) segments – as much as it does its traditional constituents, many of whom have been with the brand for the duration.

Three dealerships from the current network of 29 outlets have also represented the marque across the 30-year period – Lexus of Brisbane Group, Lexus of Canberra and Lexus of Chatswood on Sydney’s Lower North Shore.

Lexus Australia chief executive Scott Thompson said the company understands that its customers want “an appreciation of the finer details that make them feel understood, and create an authentic luxury experience to match the finely crafted vehicles they drive”.

Mistakes were made along the way, such as with models that were simply too similar to those offered by Toyota, but Lexus’ progression can be seen on a variety of fronts.

These range from scores of independent customer satisfaction awards and comprehensive owner benefits programs to transformative model designs in recent years, forays into the supercar sphere, an early leadership position on petrol-electric hybrid powertrains and successful entrees into high-volume segments such as luxury compact and medium SUVs with the UX and NX lines respectively.

Company data shows that 34 per cent of Lexus sales this year are made up of electrified models, while the percentage stands at 25 per cent based on the 28,173 hybrids the brand has sold since 2006 – when it launched the world’s first luxury SUV hybrid, the RX400h, and the first series-production rear-drive hybrid, the GS450h performance sedan.

The LS600hL that arrived a year later also brought with it bragging rights as the world’s first hybrid V8 sedan.

Rival premium brands have now overshadowed Lexus with fast-paced development and market introductions of plug-in hybrid electric vehicles (PHEVs) and full-electric variants, but these are on their way.

Its first EV, the UX300e, is expected to arrive in Australia next year – surely with the same one-million-kilometre warranty on the battery as offered overseas – and patent filings in Europe are among the indicators that a PHEV version of the next-generation NX is under development and could similarly launch here in 2021.

All-new model lines such as a mooted BX crossover based on the forthcoming Toyota Yaris Cross are reportedly in the pipeline, while the inaugural LC convertible remains on course for launch here in the second half of this year, following the updated LC coupe due this month.

Meanwhile, the GS will reach the end of the line in August after a 27-year production run, with no successor in sight at this stage.

Cumulative sales data shows us the brand’s steady growth in Australia, with Lexus taking 18 years to reach 50,000 units, but only another seven-and-a-half before it reached the 100,000 mark. The remaining 43,000 have taken less than five years.

Worldwide, Lexus produced a record 765,330 sales last year, up 10 per cent on the previous record set in 2018 and twice the volume it managed only a decade earlier in a GFC-ravaged 2009.

Overall, Toyota Motor Corporation (TMC) has forecast a decrease in total vehicle sales of more than 20 per cent for the current financial year ending March 31, 2021, with Lexus taking a hit along with Toyota, Daihatsu and Hino.

But TMC expects to remain profitable as the sales recovery kicks in, and there is every reason to expect that Lexus will return to a position of relative strength in global terms and in the Australian market, where it holds an enviable position of fourth-best-selling premium brand behind the German triumvirate of Mercedes-Benz, BMW and Audi.