Why Lexus is yet to break into the UK mainstream

Bluemarlin · April 27, 2023

I get what you're saying Linas, but my point was that Lexus aren't directly aspirational within the brand, and the aspiration comes from first owning a Toyota. So, a different business/marketing model.

I'm not sure what you mean about slow hybrids though, as the RX 450h 0-60 time is around 7 seconds, which is only around a second slower than my previous XK8, which was a sports coupe compared to a lump of an SUV.

It's swings and roundabouts I suppose. BMW has a clear upgrade path within the brand, whereas the Lexus brand isn't diluted in the same way.

Linas.P · April 27, 2023

2 hours ago, Bluemarlin said:

I get what you're saying Linas, but my point was that Lexus aren't directly aspirational within the brand, and the aspiration comes from first owning a Toyota. So, a different business/marketing model.

I'm not sure what you mean about slow hybrids though, as the RX 450h 0-60 time is around 7 seconds, which is only around a second slower than my previous XK8, which was a sports coupe compared to a lump of an SUV.

It's swings and roundabouts I suppose. BMW has a clear upgrade path within the brand, whereas the Lexus brand isn't diluted in the same way.

I am not sure about that - for me Lexus would be pretty aspirational themselves if they had something to offer to anyone who wants anything but SUV or 300h.

What I mean about "slow hybrids" is that Lexus models only have a choice of 300h and NOTHING else. 450h is not available outside of RX and now discontinued GS. If Lexus had say RC/IS 450h - that would be interesting indeed. Sure - now they have NX450h, but because I am not interested in SUVs I actually do not care.... what I see when I look at Lexus UK range now is basically single car - ES300h... no thanks!

Again I am not sure about dilution - the way I understand dilution is "premium brand offering basic cars", as such Lexus is certainly as diluted as BMW and the rest of the Germans, Lexus literally offered rebadged Toyotas. That BMW offers large number of mid-range models between complete poverty-line and flagships, that is not "dilution" - that is just well designed model range. It is important to note that Lexus does have well designed "international" model range, they just simply don't bring them to UK... which is why UK will always remain niche market and why they will never break trough into mainstream here (and any other markets where they follow same plan).

Bluemarlin · April 28, 2023

You're probably right, in that it's the model range Linas. Not sure whether that's because they won't sell well here against the competition, or simply becaue they're not offered here. Possibly the former, as Jag/BMW/Merc/Audi are very popular in the company car market, which accounts for around half of new car sales, which then of course feeds into used car availability. That would be a tough market to crack, as company car buyers aren't particularly concerned about some of Lexus' key strengths, which are reliability and dealership experience.

I assume it's a similarstory in Europe, as travelling through France and Germany Lexus were almost non existent.

Linas.P · April 28, 2023

Yes you likely right (I have myself argued that for most new car buyers long term reliability isn't that important) - but then we can conclude that Lexus will not become mainstream, because they are not really trying to break into fleet sales. Which probably goes back to my point that they are niche because they decided to be niche themselves. I guess perhaps IS220d and IS300h were the attempts to tap into that market, but both were kind "half-arsed", even Lexus themselves didn't believe in them succeeding so never really tried. Well I guess IS220d succeeded in a sense that it is more similar to German cars than any Lexus before or after it... by being so unreliable!

Now personally I don't think Lexus would not be successful in fleet sales, they just need to try... for example in UK IS300h was total flop, because of CO2 requirement of under 75g/km and the only way to achieve this was to have plug-in hybrid - BMW and MB did it and they sold loads of cars. Lexus for some reason just couldn't be bothered to comply. Likewise - Lexus never tried to compete on price in UK, they took US market because they were outright better value (still are to this day), on top of being more reliable and better built. In UK one has to pay premium to get into Lexus, which just doesn't work when the brand is establishing itself. Lexus clearly prioritised profit margins over the market share here... I guess no surprise they are stayed niche.

Bluemarlin · April 28, 2023

I might be wrong, but I imagine it's easier to compete financially in the USA, where there's not only a much bigger market, but also competitors like Jaguar/BMW/Audi/Mercedes are relatively expensive imports. It's also possible that with Toyota having a number of plants in the US, that they receive a fair amount in federal/state tax incentives, which might filter through to Lexus.

Reliability would also matter more, as there are far fewer company car buyers, parts for European imports are expensive, and Americans tend to keep their cars longer. Lexus repeatedly tops consumer reports for reliabiliity in the US.

Linas.P · April 28, 2023

Americans as well leases a lot of cars. In fact the fashion to lease cars rather than buy them came from US. Sure UK had historically a "company car culture" where it was usual to get cars via employment, but that is pretty much dead nowadays. Whenever you lease from work or yourself, there isn't much difference in my opinion.

As well I don't believe in US they value reliability any more than we do, nor keep their NEW cars longer. They do indeed drive more miles, but new car buyers there are very similar to new car buyers here - they just lease the cars for 3 years and then replace them.

Now it is true that European cars in US are more expensive, but it is as well true that Lexus cars are outright cheaper. Likewise not many of the Lexus are US made... the only model in fact is ES, as well Lexus makes RX/NX in Canada for US market and I heard they have some quality issues. But the rest of the models are imported from Japan. In short - Lexus just manages to make their cars price competitive in US, but not in EU/UK.

In summary, whatever are the reasons I just think Lexus does not consider these markets seriously... if they really wanted to compete as much as they do in US... and if importing was what made them uncompetitive, then they could as well open plant in UK and pump out NX or UX or whatever... The fact that they haven't done it means either that importing isn't an issue, or that they simply do not really care to increase their market share.