Toyota plans to replace at least a quarter of its Lexus dealers in Europe with retailers more experienced in selling premium brands, Automotive News Europe reported. The under-achieving luxury division also wants to put more franchises into multi-brand dealerships rather than the dual Toyota-Lexus outlets it has in most of Europe.
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By year end, the current Lexus dealers will be exchanged for dealers who already sell another premium brand, such as Jaguar, Land Rover, Volvo and BMW, said Filippo Bellanti, Lexus marketing manager for Germany.
The number of Lexus outlets won’t grow, at least not this year. The plan is to replace dealers, not add them, said Bellanti. He declined to say how many dealers would lose their Lexus franchise.
But other Toyota sources who asked not to be named said that a “substantial” number of dealers would be fired, probably between 25 and 30%.
The vast majority of Lexus franchises are held by Toyota dealers who operate separate Lexus showrooms and workshops. In Germany, for example, only one Lexus dealer, out of a total of 50 and another 25 service-only points, sells Lexus exclusively without also running a Toyota dealership. Only two of the 20 Lexus dealers in Italy are not combined with Toyota. Just five of 50 in the UK and two of 15 dealers in Spain sell Lexus exclusively.
Lexus marketing executives say they welcome Europe’s new block exemption rules because they encourage multi-brand franchises. “The new rules give us the chance to recruit new dealers who already have experience with another premium brand and want to add Lexus to their franchise,” said Bellanti.
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By GlobalDataMeanwhile, dealers of other luxury-brand franchises are showing interest in adding Lexus because the block-exemption rules taking effect in October allow them to do so, Bellanti said.
Toyota sources say that includes some Jaguar dealers in Germany who had invested heavily a year ago in anticipation of large X-type volumes. Sales forecasts for the new small Jaguar proved overly optimistic. Some Jaguar dealers now need another brand to help pay for their investment, said one insider.
Combined ownership was the best option 13 years ago when Toyota launched Lexus in Europe. But the brand has lagged far behind its performance in North America. In the USA, Lexus outsells BMW, Mercedes-Benz, Cadillac and Lincoln. Toyota sold 234,109 Lexus units last year, compared with 21,156 in western Europe.
“We need dealers who understand the whole idea of a premium brand, so they can provide a premium brand experience to customers,” Bellanti said. “There is a big difference from selling Toyota vehicles.”
The UK is Toyota’s biggest Lexus market in Europe, with sales of 3,684 units from January to the end of May. Germany is the next with 806 sales during the five-month period followed by Italy, 623; Spain, 493; and France, 257.
