Toyota’s Lexus luxury brand has embarked on a strategy called ‘intelligent growth’ in the United States, according to a report in the Detroit News.
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The paper said that Lexus — the top-selling US automotive luxury brand in 2002 — plans to grow sales enough but not so much as to sully its lustre or project an image of mass market merchandise.
“I could sell 300,000 units a year, but we wouldn’t be Lexus,” Lexus’ group vice president and general manager Denny Clements told the Detroit News.
The paper said that comment did not mean that Lexus would not like to improve US sales, which topped 234,000 units last year, though they were down 4% year on year for the first three months of 2003. In March, however, sales edged up 1.8%, the Detroit News noted.
According to the newspaper, in a speech on Monday before the Automotive Press Association, Clements said the combination of aging baby boomers hitting their peak earning and spending years, and favourable shifts in vehicle affordability, meant the [US] luxury vehicle market would see exponential growth in the next few years.
In another positive development, the US population was expected to grow by another 70 million by 2025, the paper added.
The Detroit News said that Lexus and its 200 US dealers are spending $US500 million to upgrade showrooms and service departments to cope with the sales surge and overcome growing pains.
A key goal of the upgrades is to minimise customer ‘hassles’ and inconveniences at the dealership, the paper added.
“We see the luxury market climbing nearly 24% by 2005 and we believe Lexus is well-poised to take advantage of this trend,” Clements reportedly said. “The biggest luxury going forward for a lot of people is time.”
The Detroit News said that Lexus has rapidly expanded its passenger car and SUV lineup – including the new RX330, which has become the brand’s top-selling model – to meet demand.
To sustain profits and growth, Lexus will control production at the expense of market share, making sure demand exceeds supply and never going down the path of competitors such as Cadillac and Lincoln by offering incentives, the paper said.
“We don’t think that’s consistent with an aspirational brand,” Lexus’ Clements reportedly said.
However, the Detroit News said that analysts see one problem in the strategy: courting younger buyers.
“The downside to brand loyalty is if you’re unable to attract a new generation of buyers,” Wes Brown, who watches consumer buying trends for market research firm Iceology, told the Detroit News. “Younger kids appreciate Lexus, however it’s less aspirational for them. There may be a point in their lives where they would buy a Lexus but they feel that would be a point when they consider themselves old.”
