Why Lexus is yet to break into the UK mainstream

[Shahpor]

1 hour ago, ColinBarber said:

Toyota GB discontinued the IS, GS, Prius and Camry because the sales dropped off a cliff, before worldwide end of production. Partly because the majority now want SUVs and partly, IMO, because the 7 year model cycle is too long and they become uncompetitive before the new model is released.

However Lexus has never had as high a market share in the UK as it has had in the last couple of years, currently 2022 is at 1.9% (end Nov):

and the same for Toyota, currently 2022 is at 6.4% (end Nov):

 

Thanks for the info Colin.

Whilst it is true that manufacturers appear to need SUV's these days, other brands still manage to bring their saloon and hatchbacks to the UK?  I know the answer to that is that they sell more volume, but we are then back to the 'Chicken and Egg scenario' mentioned by @First_Lexus above.

It would probably not make any money in the short term to bring them here (or, more likely, actually cost money!) but they still sell the LS in the UK and that surely can't generate any profit for the numbers it sells?

Perhaps it could be argued that having more products available might bring curious customer in the door that can then be 'converted' into buying a different model if necessary?

As I haven't the first clue on the business aspects of running a car company I might be talking complete nonsense, but it is a nice idea in theory at least 🙂

[First_Lexus]

15 minutes ago, Shahpor said:

It would probably not make any money in the short term to bring them here (or, more likely, actually cost money!) but they still sell the LS in the UK and that surely can't generate any profit for the numbers it sells?

Perhaps it could be argued that having more products available might bring curious customer in the door that can then be 'converted' into buying a different model if necessary?

I guess the LS is what I believe marketing types refer to as a ‘halo’ model intended to showcase the brand. I’m not a marketeer, so apologies if that’s incorrect.

Funny story. Go back 15 years and I’d owned German cars, mainly VWs which were all unreliable. Needing to change a first generation Tiguan which had experienced the infamous ‘exploding DSG’ gearbox, I was looking around at options…

One evening I was driving home and got stuck in a traffic jam outside the local Honda dealer. Needing to use the loo (!) I popped in. It was late in the day, but in the middle of the showroom was the top of the range Accord. The salesman moved in, I had a look and was impressed. I test drove it a few days later, and that was the first of three Hondas owned and a long attachment to a brand I hadn’t previously considered.

Companies need to make sure customers know what they sell through advertising - the Accord by then had virtually none - but also have the range to entice a new customer as @Shahporsays.

[ColinBarber]

43 minutes ago, Shahpor said:

other brands still manage to bring their saloon and hatchbacks to the UK?

Some do, others like Ford have ditched the Mondeo and will soon the Fiesta.

 

We don't know the business costs for Toyota to operate in Europe but each car costs money in homologation, spares holding, staff training etc. to be able to sell it. This combined with high shipping costs and 10% import duties make it difficult to compete with the European companies and make a good margin, so they limit models and choice.

 

[Malc1]

29 minutes ago, First_Lexus said:

Hondas owned

My 2006 Honda Legend is a pretty darned good car .  owned her now for 6.5? years and bought from my bro-in-law who bought it from the Main Dealer who had sold it to the original owner  ....... between them they cosseted the car and spent much £££££ on all sorts at Main Dealer prices ....... we've done about 40k miles in her and hardly spent a penny ...  just regular servicing, tyres etc .  with my indy ,  low cost but bloody good maintenance

Brilliant Comfy, Reliable ( mostly ) quite powerful limo and AWD, a boon in terrible weather for sure  🤩

and my Lexus Ls400, no.3 now and done maybe a quarter of a million miles in them over some 22 years  ........ Brilliant Comfy, Reliable ( mostly ) quite powerful limo but totally useless in snow and ice .  but oh my, wot a fantastic car 

So there we have it  ....  brilliant Mainstream Manufacturers but not very popular cars from both Honda and Lexus  .  I'd buy both again, this time from new if ever they might build them at that level of quality and reliability etc  ...  hahahahahaha, I now have the spondoolies to do so 

Lexus is certainly Mainstream from Toyota they just don't sell too many of 'em in the UK BUT globally, well, I'm guessing the sales figures are quite acceptable ( to Toyota )

Bit like buying a roller  Rolls Royce .  certainly a mainstream car, just that they don't sell very many and I'm thinking maybe their reliability factor doesn't exist ............

Malc

[b4u2]

It's a very interesting topic this and was nice to read through it. I once had a chat with lexus themselves about this point of the brand not being popular here in the UK and he told me it's a niche brand specifically set to be this way. Lexus still achieve highest reliability ratings year in year out so they don't seem bothered. 

[PaulWhitt20]

1 hour ago, First_Lexus said:

Companies need to make sure customers know what they sell through advertising - the Accord by then had virtually none - but also have the range to entice a new customer as @Shahporsays

I remember a Honda advert for the Accord, that was a series of mechanical bits hitting each other and setting off a chain reaction like a marble run, or stack of dominos. With the tag line - Isn't it nice when things just work

It only took 606 takes...

The new Honda Accord - isn't it nice when things just... work? | Media | The Guardian

And yes, I did buy one.

[First_Lexus]

20 minutes ago, PaulWhitt20 said:

I remember a Honda advert for the Accord, that was a series of mechanical bits hitting each other and setting off a chain reaction like a marble run, or stack of dominos. With the tag line - Isn't it nice when things just work

It only took 606 takes...

The new Honda Accord - isn't it nice when things just... work? | Media | The Guardian

And yes, I did buy one.

Ah yes, the famous ‘cog’ advert. Unfortunately that was for the seventh generation. By the time my eight generation came along they’d pretty much given up, apart from a forgettable ‘skydiver’ advert…

 

[dutchie01]

2 hours ago, ColinBarber said:

Some do, others like Ford have ditched the Mondeo and will soon the Fiesta.

 

We don't know the business costs for Toyota to operate in Europe but each car costs money in homologation, spares holding, staff training etc. to be able to sell it. This combined with high shipping costs and 10% import duties make it difficult to compete with the European companies and make a good margin, so they limit models and choice.

 

And that exactly is the bottom line.

If they cannot build a business case around a model they will not do it to prevent a loss.  Looks like Lexus will be a producer of SUVś and crossovers only as that is what the public wants. Saloons, estates and sportscars are dead.

[Linas.P]

4 hours ago, Shahpor said:

Whilst it is true that manufacturers appear to need SUV's these days, other brands still manage to bring their saloon and hatchbacks to the UK?  I know the answer to that is that they sell more volume, but we are then back to the 'Chicken and Egg scenario' mentioned by @First_Lexus above.

That is as well same point I am making... it is exactly "Chicken and Egg scenario". To bring more models they need to spend more money for homologation etc. but to sell more cars they need more choice. When they sell more cars, the cost per car homologation etc. will get reduced and operating costs overall will become lower per car. Now they have to support entire dealer network which sells handful cars a year.

4 hours ago, First_Lexus said:

I guess the LS is what I believe marketing types refer to as a ‘halo’ model intended to showcase the brand. I’m not a marketeer, so apologies if that’s incorrect.

But isn't LC really the halo car? In either case they don't really fulfil the purpose, because the only reason for halo car is to create an interest in the brand to sell other cheaper cars... but Lexus has nothing a like to sell. It is not like somebody get's interested in LC and then comes and buys UX... LC/LS works fine in US when they have every single model on choice and somebody can come an find something that works for them... in UK it is basically ES300h or NX300h in 2024...  

[Malc1]

UK population is so so tiny compared to the rest of the " wealthy " world, even tho; UK is still 6th ? in Global Wealth  ( behind or just ahead of Brazil is it ) and has a relative tiny landmass across which to sell it's brands and models ......  these must also be  huge factors in deciding model spread into the UK . also, unless no-one's noticed just now, much of the UK population is going thru' or about to begin to go thru', very straightened circumstances and new car purchases will drop to a very very low point in peoples aspirations 

Reality of Marketing right now eh !

Malc

[Linas.P]

39 minutes ago, Malc1 said:

UK population is so so tiny compared to the rest of the " wealthy " world, even tho; UK is still 6th ? in Global Wealth  ( behind or just ahead of Brazil is it ) and has a relative tiny landmass across which to sell it's brands and models ......  these must also be  huge factors in deciding model spread into the UK . also, unless no-one's noticed just now, much of the UK population is going thru' or about to begin to go thru', very straightened circumstances and new car purchases will drop to a very very low point in peoples aspirations 

Reality of Marketing right now eh !

To be honest the types of people who buy brand new luxury cars won't be impacted much. It is only working class which bares the brunt of cost of living crisis.

[dutchie01]

2 hours ago, Linas.P said:

That is as well same point I am making... it is exactly "Chicken and Egg scenario". To bring more models they need to spend more money for homologation etc. but to sell more cars they need more choice. When they sell more cars, the cost per car homologation etc. will get reduced and operating costs overall will become lower per car. Now they have to support entire dealer network which sells handful cars a year.

 

Stand alone Lexus dealers have disappeared in The Netherlands. Lexus operates from a corner in Toyota dealers. Sad but the reality of not selling enough cars. Reminds me a bit of Alfa Romeo that moved in with Fiat

[RadicalCoupe-Fuji]

i blame Alan Partridge

[Antharro]

I was very surprised that Lexus released the current version LS in the UK. I guess with it being a flagship model (and the first Lexus model) it wouldn't be *right* to not have it on sale, which I won't argue with. However with crossovers and SUVs taking up the market I am surprised it was worth their time. My local dealership doesn't have many LS customers. I quite liked the ES, even if it is a Camry in Lexus clothing; I wouldn't say no to one if it fit what I wanted

I thought it was a shame that the current IS wasn't brought to the UK.

One interesting thing I found out from my local dealership - apparently UK models have fewer options such as sunroofs, because they're heavy, which costs more in emissions, so Lexus can't meet European standards. So they cut out features.

[Rabbers]

11 hours ago, dutchie01 said:

Stand alone Lexus dealers have disappeared in The Netherlands. Lexus operates from a corner in Toyota dealers. Sad but the reality of not selling enough cars. ....

That happened in Denmark about ten years ago.  Lexus was sold and serviced almost as a sideline by Toyota from two or three locations before being shut down because of unsatisfactory sales or, to put it another way, because the cost of doing Lexus business was too high.  A couple of years ago Lexus re-opened with a single stand-alone sales and service business it calls a "Brand Store" in Copenhagen.  It operates independently of Toyota but there is probably some kind of background management control.  The main promotional activity apparently consists of regularly organised roadshows whereby individual models are exhibited in various towns around the country.  Namely, instead of waiting for prospective customers to come and view the cars at the Store the cars are taken to prospective customers in the provinces who can book test-drives beforehand.  It will be interesting to see if the business survives, which, if overheads tailored to fit a small-country scenario can be maintained, it very well might.

[PRT68]

2 hours ago, Rabbers said:

That happened in Denmark about ten years ago.  Lexus was sold and serviced almost as a sideline by Toyota from two or three locations before being shut down because of unsatisfactory sales or, to put it another way, because the cost of doing Lexus business was too high.  A couple of years ago Lexus re-opened with a single stand-alone sales and service business it calls a "Brand Store" in Copenhagen.  It operates independently of Toyota but there is probably some kind of background management control.  The main promotional activity apparently consists of regularly organised roadshows whereby individual models are exhibited in various towns around the country.  Namely, instead of waiting for prospective customers to come and view the cars at the Store the cars are taken to prospective customers in the provinces who can book test-drives beforehand.  It will be interesting to see if the business survives, which, if overheads tailored to fit a small-country scenario can be maintained, it very well might.

So is that going to happen here, especially as we had that survey about servicing Lexus at Toyota dealers?

[Mr Vlad]

Lexus will Never enter the mainstream. As already mentioned Lexus is a niche product. The only way Lexus will become mainstream is if it were to drop its quality standards and price of products and market their products massively like the German manufacturers do. Its that simple. 

What motoring press articles say is purely to sell more of their products. 

[KentColin]

I've never really done mainstream.  Many years ago I had a thing about MZ motorcycles.

[Mr Vlad]

wow Colin. You must have not really been bothered about bikes back then. I was and always will be a Yamaha man. Mainstream? No. Just followed in my brothers footsteps where bikes was concerned. 

[Rabbers]

21 hours ago, PRT68 said:

So is that going to happen here, especially as we had that survey about servicing Lexus at Toyota dealers?

Seeing that a good number of LOC members post about possible choices between a least two dealers for their servicing needs, it would appear that the Lexus network in the UK as it presently stands is capable of adequately catering for its national customer base - probably more so than its equivalents in some other large European countries.  Nevertheless, it would be surprising if Toyota's corporate management is not studying the prospective financial benefits of merging Lexus and Toyota dealerships world-wide where it has not already happened.  The days when the risk of tarnishing Lexus' image by visibly associating it with Toyota have disappeared apace with the narrowing of the quality, price and technological gaps.  And whereas the economic value of exclusivity is difficult to calculate, the direct and immediate benefits of rationalisation are not.  

My own experience as a long-standing Lexus customer in Italy of a joint dealership with Toyota for new car purchases and servicing is good.  My complaints have been few.  The showrooms and workshops are separate, and although two mechanics (originally there was only one) are Lexus-specific, they occasionally help their Toyota colleagues at busy times and vice-versa.  Which, of course, raises the question of why Lexus' displayed service prices over the years have been around 10% higher than Toyota's.  The dealership's answer is that, similarly to some spare parts, the differences are imposed by the two principals - obviously at the behest of the parent corporation - in order to support Lexus' higher per-car marketing costs.  Were the two ranges to be merged within the dealership and the relative operating costs shared, the expectation for Lexus owners would be cheaper servicing (though this would remain to be seen) in a context of longer booking times, less welcoming premises and personnel and, speaking purely for myself, a significant but not catastrophic weakening of my pride in owning a Lexus.  By and large, life holds greater terrors.  

[dutchie01]

 

To put things in perspective. Lexus dealer in the states where lexus IS mainstream and takes the competition head on. No niche product there.

 

 

 

 

 

 

[Mr Vlad]

Very true Bernard. The biggest difference between here and there is they get a much bigger choice in model range. 

To put it in perspective. They get the Full cake. We just get a slice. They're a massive market but we are just a small market easily saturated by the many car manufacturers. 

[Rabbers]

Low European market shares should not be confused with any attempt by Lexus to cultivate a niche brand identity.  Lexus unsuccessfully competes primarily with long-established German equivalents in terms of realistically achievable sales volumes but on at least an equal footing with them in terms of quality, technology and price.  True niche products defined as self-contained units that have little or no competition outside of themselves and whose volume ambitions are limited by strategic choice rather than the pressure of competition are few in the car industry.  Morgan springs to mind, Pagani, Maybach, Alpina, perhaps Lotus …..

[Guest]

On 1/5/2023 at 10:16 AM, PRT68 said:

So is that going to happen here, especially as we had that survey about servicing Lexus at Toyota dealers?

Isn’t servicing already carried out at Toyota? I am sure my experience seems to be you take your car to a Lexus dealer but the car is taken to a workshop that is shared with Toyota. Lexus Derby is 50 yards from Toyota both Inchcape, I am sure Lexus is purely a showroom/office etc with no service facilities, that is carried out on the Toyota site

[wharfhouse]

10 minutes ago, Derant said:

Isn’t servicing already carried out at Toyota? I am sure my experience seems to be you take your car to a Lexus dealer but the car is taken to a workshop that is shared with Toyota. Lexus Derby is 50 yards from Toyota both Inchcape, I am sure Lexus is purely a showroom/office etc with no service facilities, that is carried out on the Toyota site

At Lexus Reading, both Lexus and Toyota are next to each other (both owned by Jemca) but each has it's own service facility.