News Article "Lexus sees 'tough year' after hit from chip crisis, Russia exit...."

[Hillie]

Interesting read from Automotive New Europe.  https://europe.autonews.com/automakers/lexus-sees-tough-year-after-chip-crisis-russia-exit

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Lexus is working through an order backlog in Europe after Toyota’s premium brand was hit particularly hard by the chip shortage, forcing it to pause sales of some versions of its newly launched NX midsize SUV.   “There is no denying 2022 was a very tough year for Lexus,” Matt Harrison, president and CEO of Toyota Motor Europe, said at the automaker’s Kenshiki media event in Brussels at the end of November. Lexus sales in Europe fell 28 percent to 27,247 in the first nine months of 2022, according to figures from market researcher Dataforce. The brand’s best-selling UX compact SUV had the biggest drop, down 36 percent to 10,053.  Lexus’ European sales were also hit by the Toyota’s exit from the Russian market, which the company includes in its European reporting. “25 percent of Lexus volume was in Russia,” Harrison said. “And not small models, either. Mostly RX [large SUV],  NX and even LX [luxury sedan]. The profit impact is more significant than the sales impact.”   Lexus had been hoping for a sales boost in Europe from its newly launched NX model, which added a plug-in hybrid to the brand’s range for the first time to give it access to tax incentives offered to fleet customers.  Japanese production of the NX, however, has been slowed by the chip shortage, leaving the brand with a backlog of orders. “We have experienced severe production cuts on key models including NX, a model central to our growth aspirations this year,” Harrison said. “We are confident that when supply limitations ease, our Lexus growth momentum will continue.”

The chip shortage first began to affect global automotive production toward the end of 2020 as coronavirus lockdowns eased. Volkswagen's flagship Wolfsburg plant has been among the hardest-hit sites recently. Sam Fiorani of AutoForecast Solutions, who tracks production losses, said in mid-November that supplies could ease by the middle of next year.  In the UK, one of the biggest European markets for Lexus, customers are being warned on the brand's consumer website that 2023 production of the full-hybrid NX 350h is sold out and that order books are closed. Customers can still order the plug-in hybrid. Wait times on the NX are now 12 months, Harrison told Automotive News Europe.   Toyota has been unable to shift chips from cheaper models to unblock production, as has happened with other automotive groups with premium brands.  “NX has lot of components that are unique to the car,” said Pascal Ruch, head of value chain and business planning for Lexus Europe. “The ability to swap between cars is maybe not as big as other manufacturers.”

High hopes for 2023

Lexus is hoping for a better year in Europe for 2023, with the chip crisis expected to ease and the launch of new models such as the overhauled RX, which adds a plug-in hybrid version, and the new RZ midsize electric SUV.  “We are much more confident in 2023, especially as we see demand has never been as strong,” Ruch said.  However, the brand declined to give a sales prediction for the year. “Our major focus point is to get the supply sorted out. This is much bigger than our sales numbers,” Ruch added. Lexus said in 2021 that it wanted to increase sales in its wider European region to 130,000, 50 percent more than its 2019 sales figures. Harrison hinted that the brand is planning to launch a model that is more tailored to European preferences to increase its appeal in the region. 

“There will be some very exciting news coming from Lexus next year with a very special focus on Europe,” he said at the Brussels event, without giving more details.