Lexus Says Luxury Car Sales May Be Coming in From the Cold
June 11, 2009
By Bill Visnic and Michelle Krebs
DETROIT -- Admitting the industry and economic downturn has taken a hard toll on luxury-car sales and possibly altered, at least for awhile, customers' thinking about their "wants" versus their needs, the sales boss for Toyota Motor Sales USA's Lexus luxury division says the worst may have passed.
Mark Templin, Lexus group vice president and general manager, says luxury has been beaten down -- maybe even disproportionately in relation to the battered overall auto market -- but he believes customers will come back to luxury cars, despite enduring a once-in-a-generation recession.
"We all have short memories," Templin says of the suggestion the collective economic experience of the past year may forever dampen enthusiasm for luxury vehicles. "I'm more optimistic than most."
Templin says Lexus customers aren't the typical luxury-car buyers, their gravitation to the less-established Lexus brand is one indication they don't necessarily need to send the signals of status transmitted by the market's more time-honored European brands. So he doesn't think they will be as affected by the supposed future consumer disdain of conspicuous consumption. And he doesn't think younger buyers will long abandon their aspirations, either.
"I still think people will want to own good quality," he told AutoObserver
at media event here for Lexus' new IS C convertible and 2010 Lexus HS 250h hybrid-electric sedan. Lexus is forecasting to sell about 12,000 IS convertible models and about 25,000 HS 250h hybrids a year.
Current Numbers Hurt
No doubt, though, that the number of people wanting to own good quality has been sharply curtailed in the past year. Lexus' sales through May were off a not-insignificant 36.2 percent compared with 2008, and several individual models have been all but deserted in the showroom.
Rival BMW was leading Lexus in U.S. sales through May and has a good shot this year at taking the No. 1 sales spot from the Toyota luxury marque, a spot it has held since 2000.
Templin brushed off BMW's lead saying: "We've never been about volume." Rather, he said, is focused on owner loyalty and retention, customer service and profitability, for the brand and its dealers. Further, Templin noted, Lexus is maintaining market share.
Indeed, according to data from Edmunds.com, Lexus has maintained its market share, but its incentive spending, particularly earlier this year, was uncharacteristically high as the brand seemed to be struggling to move its older inventory. It has since tapered off to more acceptable levels, noted Edmunds.com analyst Ivan Drury.
Year-to-date, Lexus' flagship LS is off a resounding 59 percent; 4,051 were sold in the first
five months (Mercedes-Benz's S-Class plunged 53.5 percent to 2,232) and the GS midsizer is off 59.8 percent. The high-end SC, Lexus' only convertible until the recent launch of the 2010 IS C convertible lineup, sold just 93 units last month and racked up just 403 sales through May.
Templin said the numbers for the SC and GS can be partly attributed to those cars being at the end of their model cycles. The much-newer RX lineup, he counters, "is selling like mad," with about an 18-day supply. The midsize crossover's sales are down a comparatively healthy 9.7 percent for the year.
Trucks Aren't Coming Back, Though
And Lexus' truck-based SUVs have been pounded, too. Although RX sales have propped up the brand's overall truck-sales performance to just a 22 percent decline year-to-date, factoring out the RX effect leaves the brand's other two frame-based SUVs looking bad: the GX is off 63 percent for the year and the top-end LX is down 57.7 percent.
"I don't think trucks will ever grow back the way they were before," Templin said, echoing the belief of many industry executives who are convinced last year's maelstrom of high gasoline prices and the deepening recession brought customers religion about the consumptive ways of body-on-frame SUVs and pickups (Lexus has no pickup model).
Premium Hybrids an Expensive Experiment?
Templin agrees that, apart from the RX 450h crossover, Lexus has not moved large numbers of the hybrid-electric versions of its GS and LS. In total, Lexus has sold 170,000 hybrid vehicles.
Price and comparatively small efficiency returns have conspired to cast doubt on the "luxury hybrid" segment. The hybrid version of the LS flagship, the LS 600h L, costs a spectacular $106,000 and delivers combined fuel economy just 2 mpg better than the conventional LS.
Templin doesn't attribute Lexus' weak hybrid-sales achievement to the fact the brand has emphasized hybridization as a performance enhancement rather than the conventional positioning as an economy-boosting technology. But he does concede Lexus may have broadly missed the point, saying even Lexus customers may be looking to hybrid technology more for a potential economy enhancement than as a guilt-reducing performance booster.
He thinks that given the current market dynamic towards improved fuel economy and the addition of the HS 250h - the brand's first dedicated hybrid model - Lexus might kickstart its customers' interest in hybrids. And that revived awareness might spill over into the entire showroom.
He is convinced the luxury market indeed is turning the corner. "We feel like it's a different atmosphere," he said. "It (a market resurgence) may be starting."
Photos by Toyota
1 - The 2010 Lexus HS250h may jumpstart interest in luxury hybrids.
2 - Lexus general manager Mark Templin
3 - The 2010 Lexus IS C should add 1,000 sales a month.
Posted by Michelle Krebs at 6:57 AM under Analysis , Companies , Featured , Technology , Toyota | Comments (0) | digg this | Seed Newsvine
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