Sunday, May 22, 2011

Lexus Loses Big In the U.S.A.: Outpaced by Two of its German Rivals


It took eleven years for Lexus to earn the title of top dog of the U.S. luxury car market, and roughly the same amount of time for it to lose it. As a result of parent company Toyota’s accelerator pedal recall saga and the fifty percent drop in production capacity caused by the Tōhoku earthquake, old guard automakers BMW and Mercedes-Benz have left the Japanese upstart gasping for air in third place.

According to automotive forecaster IHS, Mercedes-Benz will most probably sell 254,100 cars and SUVs in the States topping BMW’s estimated deliveries of 250,400 units. Lexus is projected to drop to third place with 192,900 sales.

Eric Noble, President of automotive consulting firm The Car Lab, recently told Bloomberg news: “The house was on fire at Lexus before the earthquake hit. If the current situation wakes them up to that, then some good may come from it.”

Though it has sunk a lot of money into the LFA supercar and CT 200h hybrid batch, Lexus’ supposed mainstay models – the IS, GS and LS ranges of sedans – have all been stagnating. Its rivals meanwhile have been ramping up U.S. production, developing new or refreshing older models and sinking hundreds of millions in improving its stateside manufacturing facilities.

Bill Visnic, an analyst at Edmunds says: “Lexus is in a sort of lull in their product cadence. [The Lexus GS] is aging and doesn’t hold a candle to what BMW and Mercedes are doing.”

Though Lexus has long held a strategic position in the U.S. market, its sales outside North America have been lacking. As was the case with Volvo and safety, reliability is now pretty much a given and excellence in customer service has become integral to the vast majority of the world’s luxury automakers. With Lexus’ current woes, the result is, as you’d expect.

As Alexander Edwards, President of consumer research company Strategic Vision says: “For people who were sitting on the fence about Lexus, we saw them remove the brand from the shopping list.”

Take Audi for instance, a long-time market leader in both Europe and China. The brand’s recently revamped A6 model is doing well overseas, and the German automaker hopes it’ll have similar success stateside. Alexander Edwards again:

“The most interesting change hasn’t been with those three, but with Audi. Audi has seen very strong movement forward, capturing some aspirational [sic] interest among Gen-Y buyers, the younger consumer group that everyone wants to attract.”

The battle lines have been drawn, and three titans are ready to fight for the number one spot in 2012. Unfortunately, it looks as if Lexus will not be one of them.

By Tristan Hankins

Source: Bloomberg News

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