Lexus Reduces Prices

[Dippo]

According to Automotive Management, Lexus have reduced the price of some vehicles - there go the residuals!

https://www.am-online.com/news/lexus-slashes-ev-and-hybrid-prices-to-boost-private-sales

[Linas.P]

Well... that was inevitable. BEVs market is now shrinking, nobody can shift them, not even companies that are considered "market leaders" like Teshla (they have something like 200,000 unsold cars sitting in fields). I mean literally BS "electric utopia" is dead, I was predicting it for long time there will be saturation point and now there is that point. Lexus frankly being late comer and offering very mediocre BEVs have to slash prices to be able to sell them, they may even be selling them at loss... and even then they are hard sell.

For plugin hybrids, I think that is just competition thing, Lexus was honestly too expensive compared to other brands, so that is just expected price adjustment. 

[Malc1]

4 minutes ago, Linas.P said:

BEVs market is now shrinking

The WORLD at large won't be changing from petrol and diesel vehicles anytime soon ......  just us in the UK seem to be hooked on some dream or other that we are more polluting with our cars than anywhere else and we can make that difference !

We're being taken for that ride by China and BYD who are producing zillions of EVs and building the most amazing number of new coal fired powerstations every month .........  they haven't a care in the world about our UK Clean Air ambitions I'm sure 

BUT for sure, keep on buying those EVs from Tesla and BYD and even the later into this dying market, like Lexus and Renault and Ford whatever ............ 🤑

Malc

[Linas.P]

Yes, but even in UK the BEV sales are shrinking... what is kind of ironic - EVangelist were calling me crazy just few years back, when I said "BEVs will reach 10-20% of market and that will be it, no amount of false advertisement, racketeering, nor subsidies will move more of them, because people simply can't utilise them, infrastructure is not there, charging points not there, parking is insufficient".

And what we have - after years of double digit growth we have 16.5% in 2022 and 16.6% in 2023... and YTD 2024 is again 16.5%. And that is sales, the total number on the roads have not even reached 10%. 1.145 million out of 30+ million, that is mere 3%! And nobody wants any more of them because they suck.

PHEVs still rising, but BEVs are really established as a niche thing and I think they will remain there (or should I say - "current tech" based BEVs will remain niche, until there is some magical new Battery material or technology breakthrough, but that may not happen for many years) .

[Malc1]

And sheer desperation to get EV private personal sales as opposed to probably very heavily subsidised corporate sales to get those figures right for the Govt volume criteria and trying to avoid those upcoming severe £££££ penalties  

EVs seem to be a rigged market and the novelty of owning one will wear off as soon as the buyers, both personal and corporate, have to on-sell or p/ex and take an extraordinarily huge depreciation hit in real cash terms when liquidating the asset …….. this is the real world methinks 🤔

Toyota Lexus we’re very late to the EV concept and market coz they were dragged screaming and shouting into it just knowing it was probably going to be zero cost effective and a Balance Sheet drain for years to come 

Maybe I’m hopelessly wrong 🤣

Malc 

[Tickedon]

I said this in the other thread in the price cuts… This is the ZEV effect. 

22% of cars that manufacturers register and sell this year must be zero emission vehicles, or they get fined £15k per vehicle they are short. For the first couple of years of the zero emission mandate, manufacturers can get one credit for selling an EV (nice and simple) and also earn partial credits for lowering their average fleet co2 (very complex formula). PHEVs (plug-in hybrids) have much lower co2 emissions under the testing regime (a quarter or less of a hybrid car) and so are a great way for Lexus to earn partial credits by significantly lowering their fleet emissions, and not get fined £15k per car.

Before these price cuts, Lexus had been offering much larger PCP deposits and lower interest rates on its EVs and PHEVs, compared to the offers on their normal hybrids. It meant their PHEVs worked out roughly the same (or less) to purchase new than a hybrid. 

At the start of July, Lexus only reduced the prices of their EVs and PHEVs (450h+ models) but didn’t reduce the standard 350h hybrids. They also still have better EV and PHEV PCP offers - so this is clearly about dissuading standard hybrid purchases.

Earning a bit less money on sales is clearly preferable to paying ridiculously large fines! 

[Linas.P]

49 minutes ago, Malc1 said:

Maybe I’m hopelessly wrong 🤣

No you are exactly right, the gravy train worked as long as government subsidised it and as long as car makers were accepting used BEVs for new ones. This was possible when they were very small number of cars and when it was still possible to trick people into having one. It is almost like pyramid scheme. Get BEV and pass it on another loser, to upgrade to newer one.

Eventually the line of losers willing to experiment and take BEV shaitsandwich dried out... and now pyramid crumbles. Starting mid-last year dealers stopped taking BEVs on PX... or offered ridiculously low valuations due to inventory issues (used ones started to pile-up), people started listing them privately and realised that outside of EVangelist religious sect there is very little desire to have one by general public. Used BEV prices tanked, the people who owned them lost equity, that left them unable to continue the cycle of upgrading to newer model... and whole EV revolution lost steam.

Sure there are still initiative/penalties for selling more BEVs as outlined in excellent post above, but I feel soon the targets will become unworkable and UK government will have to walk back and push them into the future. 

[Tickedon]

4 hours ago, Linas.P said:

Sure there are still initiative/penalties for selling more BEVs as outlined in excellent post above, but I feel soon the targets will become unworkable and UK government will have to walk back and push them into the future. 

I’m not quite as pessimistic about the medium-term EV market, but, if you think Ed “no more oil” Miliband is going to relax EV targets… I have a bridge to sell you! 

[Linas.P]

39 minutes ago, Tickedon said:

I’m not quite as pessimistic about the medium-term EV market, but, if you think Ed “no more oil” Miliband is going to relax EV targets… I have a bridge to sell you! 

I think they will have to... those targets were previous government populism, where they lied to people and to international community that they can achieve it... it was populism, it was not based on any specific policy (that would have helped to achieve the target)... it was basically finger in the air promise. Somebody with common sense needs to look at them now and adjust them.

Will the do it... it remains to be seen. Maybe they wont, but we can prove mathematically that 22% by the end of this year is unachievable target. Let's UK sees ~2.5 million new cars sold each year, we are already in second-half and on 16.6% of those cars are BEVs and sales continue to slow down. So we on tract to be 135,000 cars short. That is £2 billion in fines just this year. For how long the car makers can stay in the market spaying £2 billion a year just in fines on the product that is already very low margins?

Not to mention - there are continuous increase in the targets and BEV sales will continue to slum, or will increase in painfully slow pace from now on. Basically honey moon for BEVs is over.

So it is one thing to miss target by 6%, pay say £100 million fine one year with the hope that next year it will be possible to meet the target... and another matter is when the target can't be met this year, nor ever as the target will become increasingly difficult to reach in the market that already reached the capacity for this shaite. 

What are the solutions there? To drop out ICEVs models and lose market share? Make entire range just from BEVs? What will that help if people just not going to buy BEVs... don't need them, can't use them? 

I am not expecting that Labour will be kind to motorists, it is not their thing, but at the same time they have to deal with reality - rising living costs etc. So they will have to balance out their policies, some may be against their core beliefs of "public everything"... I am sure they would make everyone to use public transport if they could and ban car altogether, not only the ICEV, but first of all that public transport has to exist (it doesn't at the moment). Also like any political party they need voters to continue to vote for them... and as it happens those voters are dependent on cheap personal transportation today, more than ever before. It probably was okey to be thought on cars in 1960s when few people had them, it is not so easy today when public transport has basically failed or is close to total failure and taking away cars would mean staling the economy.

Remember - Labour will have to earn trust somehow, they need to prove now that they are not horrible for business, that they can keep cost of living under control etc. So I think they will have to drop some costly and stupid (and unachievable) environmental targets, because it would be stupid to completely crash entire industry sector because of made-up promises of previous government... even if they are fundamentally consistent with socialist policy long term. Just look how they are dancing around the question about fuel duty... Sure they say they revert back to 2030 ban that was postponed to 2035, but that is what they said when they were in opposition... I would not be surprised if they come up with "new pragmatic way" and say they they would have wanted it to be even earlier, but Tories are at fault for not creating infrastructure and now that is no longer achievable and will have to be 2040. It is win win - people will support it and they can stick it to Tories. It is nothing new - opposition is always critical of party in the power, but when they are in the power suddenly things change.

So in short yes - I believe that automakers will lobby for them to be dropped.. and they will be dropped, or they will be delayed, or simply not enforced. 

 

[Malc1]

The other simple fact of life is that unless the UK Govt tax regime allows Toyota and Lexus and the other car manufacturers to make profit from UK manufacturing, servicing and sales then those car businesses will simply vanish and take their business to another country and tax regime ……… they’re global businesses and there’s plenty of other countries with willing competent workforces and more friendly Govts 

Certainly the UK sales market is brilliant for the motor manufacturers BUT they’ve got to be able to make it work for them and profitable …….. no way to make profit and they’ll simply, reluctantly go elsewhere …….. these are global businesses and will get fed up bashing their heads against a brick wall ……. the UK Govt penal car tax regime 

These are Global businesses and NOT UK centric 

Malc