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March 22, 2011updated 08 Apr 2021 8:08am

ANALYSIS: Lexus aims for brand lift in Europe with CT200h

Lexus has long found the going in Europe – where the German premium brands dominate – tough. But it is aiming for a step-up in volume with a new entry hybrid model, the CT200h. Dave Leggett takes a look at the car and hears about the brand strategy.

Lexus has long found the going in Europe – where the German premium brands dominate – tough. But it is aiming for a step-up in volume with a new entry hybrid model, the CT200h. Dave Leggett takes a look at the car and hears about the brand strategy.

In the EU sales territory, Lexus is something of a minnow. BMW, Mercedes-Benz and Audi each notched up annual sales approaching 600,000 units in 2010. Lexus was under 17,000. European premium brand buyers are hooked on the traditionally strong German prestige marques. It’s a different story in North America where Lexus has done well (though with different brand positioning that involves what are more obviously adapted Toyotas) and brand loyalty is less entrenched. But Western Europe’s premium car market is tough to break into. Customers who are prepared to buck premium-end convention and go with a non-German brand are thin on the ground  – just ask Saab, Jaguar and Cadillac.

When looking at the European premium car marketplace, the important thing to do is define your brand values and be realistic about what you can achieve.

The Lexus approach is to emphasise the sophisticated hybrid technology developed at considerable expense by the Toyota Group. If we accept that things like quality of finish and refinement, premium segment feel, are givens at this end of the market, hybrid technology associations can act to differentiate the Lexus brand in two ways. Firstly, it’s green. While the naysayers will point to the inherent weight penalty that results from carrying two powertrains or the fact that you are still reliant on fossil-fuels, there’s no denying that Lexus hybrid powertrains yield a CO2 emissions number that is relatively very low (the CT200h averages at 94g/km of CO2; the BMW 1 Series diesel manages 118g/km). So, you can have a bit of justifiable green glow in your Lexus hybrid – ‘responsible’ premium car driving, but performance is nevertheless delivered with class-leading economy. There are Lexus diesels too, naturally, but Lexus in Europe is looking for gasoline-electric hybrids to account for over half of the brand’s sales.

The second differentiator is the high-tech element. The synergy aspect to the hybrid system, with the powertrain contribution to the drive constantly varying, the battery being charged as you go and the associated (slightly mesmerising) driver interface has a definite whiz-bang factor.

So that’s some of the important thinking on the brand values side. The product and distribution strategies obviously also need to be supportive to the overall mission of increasing sales and successfully developing profitable market presence in the long-term. And it is a long-term game with no requirement to have ambitious sales targets that involve the dangers of mixing it with the established players. That lesson, I sense, has been well and truly learned after some over-optimistic targets in the past.

The Lexus CT200h arrives this year as a hybrid-only model that should appreciably lift Lexus sales in Europe. It is not a replacement for an outgoing model; it’s taking Lexus for the first time into the premium compact segment, which is occupied by vehicles such as the BMW 1 Series and Audi A3.

Market analysts maintain that the compact premium segment is one of the few to be growing in Europe with sales converging from above and below. IHS Automotive estimates that the European ‘C-premium’ market was 637,000 units last year, 8% up on the previous year.

The Lexus CT200h potentially hits a number of market sweet spots. There are the affluent older people – ’empty nesters’ and the like – who want a bit of luxury late in life. There’s a demographic bulge of them in the pipeline, so they’re not a bad group to be needs-meeting. And then there are the younger customers attracted to a car that comes with high standards and also environmental credentials. It’s perhaps a less aggressive marketing stance than that suggested by the likes of BMW. The use of Kylie in the marketing (join the ‘quiet revolution’) suggests an aim of wanting to appeal to young professional females, in particular.

And in these fiscally straitened times, some premium brand customers may also be interested in a smaller car with a smaller price tag and lower running costs. Think banker who perhaps wants a second car for Mrs Banker.

Crucially, Toyota Group has been missing out as Toyota owners upgrade to premium brands. The Lexus CT200h aims to partly plug that gap and keep ’em in the family. Of the estimated 10% of Toyota owners who upgrade to a premium model, only 10% have been going to Lexus and staying within the Toyota family. With a third of these premium brand upgraders opting for vehicles in the compact premium segment where the price leap is going to be less, Toyota  Group has had to be resigned to losing them due to the absence of a compact premium model. The Lexus CT200h changes that.

“This is a very important model for us,” says UK product manager Paul Vecchione.

“With the addition of this model we can keep customers within the Toyota family, plus we see this model as a conquest tool for compact premium and mainstream D segments,” he says. He sees conquest customers from the high-powered and specced D-segment variants. But the three premium Germans and high-spec Volkswagen Golf variants are well and truly in the conquest sale cross-hairs.

Vechionne maintains that Lexus in the UK will not be going hell for leather for the fleet market.

“We are not tempted and we do not need to go for a high discount strategy in the fleet sector,” he says. “We are looking at a 45:55 fleet to retail split and we want the fleet sector to appreciate the quality of our offering.”

What does the typical fleet user for the CT200h look like? He sees a 35-year-old professional who is attracted to the car’s premium quality, its positive environmental associations and the simple fact that it isn’t one of the more established brands. Females are clearly a target.

And the retail buyer?

“We expect a higher proportion of mature buyers. It may be a second car or it could be the main car with the buyer deciding that they want a bit of luxury. And this is a car that boasts fuel economy, too, something that will especially appeal to retail buyers.”

For the UK car market, Lexus is targeting CT200h sales of 4,100 units this year rising to 6,000 units in 2012 when there is a full year of sales. That takes Lexus in the UK to a planned 9,225 units this year (versus 6,200 units in 2010) and 10,600 units in 2012.

In Europe, the plan is to add 30,000 CT200h units to get to 60,000 Lexus brand sales in 2012. That underlines the importance of the model. Does that European number look a little large? You have to add in the non-EU markets to the 17,000 of EU sales last year and the ‘all-in’ European number also includes Russia. And Russia is a place where Lexus has been making rapid progress and is closer to the big boys than is the case in Western Europe. In 2010, Lexus shifted almost 11,000 units in Russia (72% up on 2009) and its sales compared with 20,600 for BMW, 19,700 for Mercedes and 18,500 for Audi.

The car itself

The Lexus CT200h is a full hybrid, capable of running on its petrol engine or electric motor alone, or with both working in combination. The system comprises an Atkinson cycle 1.8-litre VVT-i petrol engine and a powerful electric motor that in combination deliver 134bhp, together with a 202V battery and a power control unit. A power split device automatically combines and reallocates power from the engine, electric motor and generator, as driving conditions demand.

The electric motor works in tandem with the petrol engine to boost acceleration, or drives the wheels on its own when EV mode is selected. During deceleration and braking the electric motor works as a high-output generator to effect regenerative braking.

Driving through an electronic continuously variable transmission (E-CVT), the system gives the CT200h 0-62mph acceleration in 10.3 seconds (target figure). Combined cycle fuel consumption and CO2 emissions for CT200h in the UK are 68.9mpg and a class-leading 94g/km respectively (provisional figures).

This five-door hatchback starts in the UK market at GBP23,500 (on the road). UK sales start March 1. Lexus maintains that this full hybrid is well equipped and very competitively priced. CT200h SE-I entry model includes as standard a six-speaker audio system, active brake lights, dual-zone climate control, LED daytime running lights and rain-sensing wipers.

The car is built at Toyota Motor Kyushu’s (TMK) Kokura plant (Fukuoka Prefecture – in the southwest of the country) which is dedicated to hybrid production. It is built alongside the RX450h on Line 1.

Lexus says the CT200h is built on a new platform which benefits from a series of exclusively developed body, chassis and powertrain control systems.

Lexus is also highlighting that, unlike conventional diesel engines, the ‘Lexus Hybrid Drive’ system  which powers the CT200h produces ‘near-zero levels of NOx and particulates’. Preliminary fuel consumption figures further strengthen the car’s clean and efficient profile, with an anticipated 68.9mpg in combined cycle driving. In Britain, the car’s 94g/km CO2 average means that it comes VED (‘road tax’)-free and is exempt from the London Congestion Charge. It also scores well on the company car tax benefit-in-kind scale.

Lexus also emphasises aerodynamics in the design. It says its engineers used extensive computer aided design and wind tunnel testing to ensure every detail of the car’s body – including the underneath – contributed to achieving the smoothest possible passage through the air. Lexus says that CT200h comes with the lowest coefficient of drag in the small luxury car class – Cd 0.28. Lexus also says that designers have given the car the lowest possible centre of gravity with a high-rigidity bodyshell, a lateral performance damper system and new double wishbone rear suspension, which ‘all contribute to delivering high speed stability, smooth and precise handling, rewarding agility and the ride comfort expected of any Lexus’.

In case you are wondering, Lexus says that CT200h can run for about one mile on its electric motor alone at speeds of up to 25mph. This is a car to think of as a premium player, but with a bit of added green. It might not be quite as sporty as some, but that’s not necessarily the point. If you don’t want to compromise on sports performance, this car isn’t for you. It’s no slouch, but the CT200h is a bit of a softie. This is a quiet revolution, no shouting. Kylie drives it. And it is much better to look at than a Prius. I can see people going for it. The critics are, I think, slightly missing the point. 

Eco-plastic first

Here’s an unusual first for the CT200h. Toyota has developed a new ‘ecological plastic’ that it says is now ready for extensive use in its forthcoming models. It is described as tougher, harder wearing and more shrink resistant than previous bio-plastics and Toyota claims it is the first in the world to be made using bio-PET, which includes a raw material derived from sugar cane.

Developed by Toyota and Toyota Tusho Corporation, it will reduce the amount of petroleum-based products used in manufacturing and also cut vehicle whole-life emissions performance by being more carbon-neutral. The new plastic’s qualities make it suitable for use for vehicle liners, carpeting, seats and other interior surfaces. Its first application in a production model is for the luggage compartment liner in the new LexusCT 200h, while later next year Toyota proposes to introduce a model in which it will cover 80% of the vehicle interior. Through its use in volume production, Toyota expects the new ecological plastic to match the cost-per-part performance of conventional, petroleum-based plastics.

Is Kylie going to tell us about that in the ads?

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