Lexus Barely Hanging on as Top Selling Luxury Car
The 2010 results are in for luxury car sales, and according to Edmunds.com's AutoObserver, the finish was tight at the top. Lexus, BMW and Mercedes were separated by "fewer than 10,000 sales" and offered larger incentives to sustain sales. Toyota's safety woes aside, this means that Lexus is barely hanging on in the face of former rivals whose brands are surging.
Nonetheless, this is Lexus' eighth straight year as the king, which raises the question: Will the legendary Lexus brand ultimately be enough to beat back the challengers?
The Birth of the Bland
Lexuses are luscious automobiles, but the brand doesn't, to steal some ancient Pontiac marketing, "build excitement." Passion isn't the point. Reassurance is. Unfortunately, fighting an incentive war with your competitors, artificially juking sales to hang onto the sales leader title, is the kind of thing you'd expect from the old GM.
Lexus is now on the run. Both BMW and Mercedes have changed a lot since the Lexus (and the other Japanese luxury marques, Nissan's Infiniti and Honda's Acura) showed up. They've radicalized their designs and created entry-level cars. Gone a little wacky, to be honest.
Americans Are Easily Bored, Even by Boredom
I'll just say it: Lexuses are incredibly boring. Toyota's take on the high life is beginning to look a little long in the tooth, representing yet another hurdle for the carmaker. Lexus has always aspired to be a new take on what luxury usually means.
The point wasn't necessarily to steal share from existing upmarket brands, but to provide Toyota customers with an posher option so that they'd stick with the company. By adopting this strategy, Toyota was seeking less to emulate Mercedes and more to copy what had worked for General Motors and Ford, where luxury is just one option on a continuum. And although the first Lexus ES may have resembled a Mercedes, it didn't share the German car's plutocratic associations. Nor did Lexus pretend to be a wealthy enthusiast's performance ride, like BMW. Rather, Lexus sought to eliminate all emotions from the luxury automotive experience, save one: absolute commitment to quality.
But now Lexus is losing sales in the U.S. to a resurgent GM and Ford, the electric car revolution is putting pressure on the Prius, and then there was that little unintended acceleration thing last year.
That esoteric bond of trust that Lexus forged was a blissful differentiator. But even bliss can get boring. After all, the number four-luxury brand in 2010 was Cadillac, achieving a big bump from its 2009 numbers. With its exotic designs, Cadillac is presenting itself as pretty much the anti-Lexus.
Is It Time for Lexus to Reinvent?
The bottom line is that by transforming luxury into the automotive equivalent of a warm bath, Lexus has thrived, but is threatened. Because its sales are lower than mass-market brands, a luxury brand needs to hit double-digit profit margins. Asking the mass-market to subsidize Lexus makes sense from a market share point of view, but it's a Band-Aid. Lexus redefined luxury before. It may be time to do it again.
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Photo: Toyota Media