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Lexus Eyes Performance Crowd


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“How much more quiet can your car be?” For Denny Clements, general manager at Lexus, that’s more than a rhetorical question.

It’s been more than fifteen years since Toyota’s luxury division burst onto the scene and to the surprise of many — especially its German competitors — began carving out a sizable share of the U.S. market. Last year, the automaker saw an 11 percent increase in volume in the world’s largest luxury market. With sales of 287,927 cars and trucks, it repeated its role as the segment’s top nameplate.

Yet, ironically, what originally made the brand a success is what could create problems for Lexus in the future. Its early success had much to do with undercutting the price of the competition. But Lexus does not want to be seen as a cut-rate brand. Then there’s the issue of silence. Lexus unquestionably sets the benchmark for interior noise. So quiet, in fact, it had to engineer the sound of a gutsy V-8 back into the new GS430 to underscore its performance.

Bringing passion in

The automaker may make the most reliable cars on the road, but critics contend that has made Lexus more like an appliance than a BMW or Mercedes. The challenge, Clements admits, is to pump some passion into the brand.

The new GS is a critical step in that process, as is the LF-A sports car unveiled in Detroit last month. The 200-mph two-seater is officially a concept vehicle, though Clements acknowledges, “We really want to build the car,” which borrows on know-how gained through Toyota ’s Formula One efforts.

The Toyota Group VP estimates there’d be a market for as many as 100 a month at $125,000. But, “It’s not about volume,” Clements quickly adds. “It’s about image. (The) imperative now is to create more buzz.”

The Toyota division actually has been quite quiet for several years, having not introduced a new passenger car since 2001, nor a sport-utility vehicle since 2003. The drought is over.

An all-new version of the entry-luxury IS model is nearing production. So is the RX400h, the first hybrid-electric vehicle in the luxury segment, a second HEV will follow barely a year later. Early hybrids, like Toyota ’s Prius, sacrificed performance for fuel economy. The GS450h will trade off a bit of the fuel economy gains for what Clements describes as “pure performance.”

In fact, performance has become a favored word in the brand’s corporate vocabulary. It is “seriously” studying the idea of launching a brand-within-a-brand modeled after Mercedes’ AMG. “I’m not telling you we’re going to do it,” says Clements, though he’s “absolutely” in favor of the idea. “We need to have a flagship in every segment, like AMG.”

Young performance brand considered

This new emphasis on performance could prove especially appealing to the sort of youthful buyers that have traditionally shunned Lexus for more sporty marques, like BMW. There are signs that Lexus could pull it off. The median buyer age for the current IS is just 29.

Until recently, Lexus was essentially a U.S. brand, with only limited presence in Europe, and even less in Asia. Worse, Lexus products were little more than modified versions of vehicles sold through various Toyota channels in Japan. So, there was little visual brand “DNA” as designers like to say.

The parent company is moving to change that — fast. Things “really kicked into high gear” in 2003, with the creation of the Advanced Product Strategy Group, says Ben Mitchell, who oversees advanced product strategy for Lexus. Based in Los Angeles, the group developed the LF-C concept vehicle, which showcased a new design direction, known inside the company as L-Finesse.

With Lexus now a Japanese brand in its own right, with its own design and engineering centers, the division is getting products — and a look — it can truly call its own.

Still more big changes are in store, brand officials reveal. The new six-cylinder GS300 will be offered with an optional all-wheel-drive system, reflecting a significant trend in the luxury segment. Mercedes already offers optional AWD on most of its products, and brands ranging from Cadillac to Infiniti are rushing to catch up.

Clements notes that in colder climes, sales of rear-wheel-drive Lexus vehicles virtually “dry up” when snow starts to fall, and he’s hoping the new GS300 AWD package will perk things up. He also believes the technology could help Lexus — and other luxury makers — reverse the decade-long migration from sedans to sport-utility vehicles. As a “ballpark,” Clements estimates about a third of Lexus sedans will features all-wheel-drive by decade’s end.

Despite the division’s strong showing over the last few years, there’s no guarantee Lexus can maintain its leadership in the U.S. luxury market. Its top competitor, BMW, has an assortment of new products coming this year, including an all-new version of the 3-Series. Mercedes-Benz has four important launches. Cadillac is showing strong signs of a comeback. And even the Japanese also-ran, Nissan’s Infiniti division, is on a roll and hoping to cut into Lexus’ share.

So the steps the Toyota division is planning are critical, say company officials and analysts alike. Lexus has had a way of quietly going about its business. It will need to make some noise now if it hopes to keep the momentum going.

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