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Lexus Chief Wants to Expand Lineup; Target BMW and Mercedes Buyers

January 16, 2004

Toyota wants to expand its Lexus brand significantly by beefing up a sporty entry-level luxury model and possibly adding to its product line a couple of vehicles priced above $70,000 that would put Lexus in direct competition with Mercedes-Benz and BMW, according to The Wall Street Journal.Denny Clements, head of the Lexus brand and a senior executive at Toyota's U.S. sales unit in Torrance, Calif., told the Journal he "couldn't be happier" with the way his brand is performing. Lexus sold 259,755 vehicles last year, up 11 percent from 2002.The Journal said Clements is aiming to boost Lexus's annual sales to 350,000 vehicles within the five years, though its sales this year are likely to show only a modest increase at best.He reportedly said unleashing an assault on BMW's near monopoly on younger buyers with its 3-series cars and Mercedes' equally strong grip on consumers buying luxury cars priced above $70,000 "should give us a huge opportunity to grow Lexus."According to the Journal, Clements noted that Mercedes has a dozen model variants priced over $70,000, while Lexus has none. The brand's flagship car, the LS430 sedan, starts at around $54,000. Clements reportedly said recent Lexus surveys have shown its customers are interested in buying higher-priced vehicles, and in some cases leaving Lexus to buy Mercedes cars. "So we are asking [Toyota's product planning office in Japan] for more product offerings at the higher end," he added, according to the report.In his Wall Street Journal interview, Clements declined to be specific about what type of super-luxury vehicles he is looking for, but noted that among them are "a sedan" and "a sports car."Clements told the Journal that in the entry-level luxury segment -- which has been growing as vigorously as the segment for $70,000 or above luxury cars -- Lexus is looking to offer more body styles and other variants for the redesigned IS entry-level model in an effort to dislodge BMW's near monopoly on sporty, entry-level luxury-car buyers. The Journal noted that Lexus hasn't said exactly when the redesign IS would arrive in dealer showrooms, but one Toyota official reportedly said it should come within the next two to three years.Clements told the Journal that BMW sells about 10,000 3-Series cars a month, which he said are offered in several body styles, including convertible, and with powertrain and other options. "A half of those sales are coupes, and I don't even have an IS coupe in my lineup," he reportedly said.The Journal noted that Lexus currently offers two IS models - a sedan and a five-door hatchback. "We need for sure a coupe, a convertible and a sedan with multiple powertrain offerings," Clements reportedly said.According to the Journal, he added: "It's important for us to be competitive in the entry-level luxury segment" to capture those 30-something consumers who are buying BMWs. "Those are young professionals that are going to be luxury-car buyers for the rest of their lives."
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