Lexus to focus on "step-up" market

Lexus Australia says it can see plenty of opportunity to conquest customers away from mainstream brands as it aims to grow by five to ten percent year on year for the next five years.
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While Lexus is expanding its model lineup with the likes of the new medium-sized Lexus NX SUV and Lexus RC coupe, it’s looking to lure potential first-time luxury buyers to ditch mainstream brands in its favour.

Speaking to CarAdvice in New York ahead of the Lexus RC launch, the company’s Australian boss, Sean Hanley, confirmed Lexus’ interest in that market.

“The luxury market is certainly healthy, but there is a bigger market there at the moment that we think Lexus should be focusing on: its called the step-up market.” Hanley said.


“Those coming out of mainstream, those looking for the alternative to mainstream motoring. We think we are a really good and credible brand for those people to consider, so we’d like to get our consideration set in that market up, in fact, that’s where we’d really like to focus our energy.”

In 2013 Lexus sold 6,920 vehicles in Australia (up from 6,839 in 2012) and from January to July this year, the Toyota-owned brand has managed 3,990 sales (up from 3,893 during the same period last year). Those figures will improve noticeably with the arrival of the NX SUV and RC350 coupe later this year, making 2015 potentially a game changer for the brand.

For Lexus to achieve a five percent growth year on year for the next five years, it should see its sales at around 9000 units by 2019, an impressive feat considering the continuously fierce competition from its German rivals.

But unlike the Germans, Lexus is in it for the “long game” and will not play the price war, Hanley says.

“For me, specification, performance [and] customer service at a good value proposition is more important than just straight price.”

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Nonetheless he did admit that “there will be some fluctuations in sales while we play the long game.”

While the introduction of a new generation Lexus GS and IS has helped the brand achieve record sales, the pace of the Lexus’s growth in Australia is overshadowed by the likes of Mercedes-Benz (up 16.3 percent year on year), BMW (up 9.2 percent year on year) and Audi (up 18.1 percent year on year) – all three of which have expanded their model lineup into more affordable segments.

Nonetheless, in the segments where it competes, Lexus Australia doesn’t intend to have a race to the bottom in terms of price.

“We respect absolutely our competitors but we don’t framework our business model around them, we do it our way, the Lexus way.”

“I think you got to remain true to the brand. There is a raging debate at the moment as to where luxury starts and finishes. In the end it’s about status and service that the brand brings to the customer.”

While the Japanese luxury car manufacturer arguably forced the Germans to lift their game when it came to customer service, it’s destined to set the bar even higher, with Hanley confirming a range of new innovative customer service features set for launch over the next few months.