A claim this week that Toyota Europe plans to replace a quarter of its Lexus dealers with more experienced luxury car outlets is an exaggeration of remarks made by relatively junior executives in Germany, the continent’s top Lexus official said today.
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Toyota Motor Europe’s director of Lexus Europe, Stuart McCullough, was referring to an Automotive News Europe report, carried on just-auto.com on Monday, which said some dual Toyota-Lexus dealers would be exchanged for dealers who already sell another premium brand.
While not denying some aspects of the report, McCullough told just-auto that the intention to separate Lexus from Toyota Europe dealerships was announced, as a long-term project, as far back as 1997 and had been achieved in some markets more quickly than others.
“In the UK we’ve one to two new showroom developments to come but in Spain, Italy and Belgium we’ve completely developed our restructuring and, in Russia, the network was established as stand-alone from the start,” McCullough said.
“In each country we have set in place a network development strategy to suit the individual market.”
He noted that the Monday Automotive News report had been relayed widely and had caused some concern among Lexus dealers, particularly in Spain.
Acknowledging that the report was oriented primarily around Germany, McCullough said Lexus Europe was still having discussions with dealers over the appropriate size of the network there.
“It’s a more intensive process,” he said. “The volume doesn’t support a full investment in Lexus. Germany is quite complex. Other networks such as BMW, Mercedes-Benz and so on have a very high proportion of dealers to the number of cars sold. The density is high but Lexus is a low-density operation in the US and UK [two of its most successful markets]. German [luxury car] buyers like to have a dealer on their doorstep so the idea of high-volume dealers is quite sensitive.”
McCullough said the ideal number of dealers for Germany was in the 40 to 70 range – there were 55 at the end of 2002 and 61 will be operational by the end of this year.
“Dealers may not be in the right place and our future product plan will change the demographics.”
With regard to sacking dealers, McCullough noted that just about every network has dealers on termination notice due to changes in the block exemption rules – dealers reviewing their positions with manufacturers is ongoing, he said.
While he would not comment specifically on this week’s suggestions that dealers of other luxury brands would add Lexus, McCullough said that, in some cases, teaming Lexus with some premium brands would be either acceptable or not acceptable.
“We have not changed our strategy of considering whether to team a Lexus outlet with a Toyota dealer or a BMW dealer on a case-by-case basis,” he said.
McCullough said the UK was a “case study” for the issue. “Many Lexus retailers, particularly within large dealer groups, may have Toyota in their portfolio, too, but not in the same region. They may also have BMW and Mercedes outlets as well.”
