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Punching More Passion into Lexus

Japanese maker expects smaller share going forward.

by on Nov.21, 2011

Lexus hopes to redefine itself with the new GS, putting more passion into a brand not normally known for fun-to-drive dynamics.

Can passion cure the blues for Lexus?

It’s been a tough year for the upscale arm of Toyota, Lexus likely to lose its long standing as the nation’s best-selling luxury automotive brand due to production shortages that followed the earthquake and tsunami that struck Japan last March.  But Lexus has other challenges to deal with as it struggles to regain its status as king-of-the-hill.  Competition in the luxury market continues to increase – not only from existing automakers but also from new competitors like Hyundai, which last year launched its first premium luxury sedan, the Equus.

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So, Lexus is setting out to redefine itself with new products like the 2013 GS sedan, a model designed to “start adding driving dynamics,” said Lexus General Manager Mark Templin, to a brand not known for having a passion for performance.  The maker is also rethinking what products belong in its line-up.  It is less likely to try to match the brand proliferation of rivals like Mercedes-Benz and BMW and may even be willing to cede some market share, said Templin, to stay focused on what it does best.

The transformation of the Lexus brand begins with the mid-range GS.  The sedan, which goes on sale early next year, is the first product to reveal the new “face” of Lexus, a more distinctive look based on the brand’s L-finesse design language.  The goal is to make it look more aggressive and less derivative than earlier Lexus models.  The GS, which has been championed by Toyota CEO Akio Toyoda, also was engineered to deliver a more sporty and exciting ride, Lexus aiming to address long-standing criticism that its products were designed for those who really didn’t care much about driving.

Lexus has been the most aggressive of luxury brands when it comes to focusing on hybrids, and Templin says the ultimate goal is to have a gas-electric version of every model in the Lexus line-up.  But the focus is likely to become sharply different from the mainstream Toyota brand, whose hybrids sacrifice performance and passion for fuel-efficiency.

Significantly, the most aggressive version of the new GS line will be the GS450h hybrid, its combination of a V-6 engine and electric motor designed to deliver the performance punch of a V-8.  Meanwhile, Lexus is reportedly getting ready to drop one of its entry-level hybrids, the slow-selling HS250h, whose fun-to-drive quotient is relatively minimal.

While Templin wouldn’t discuss such plans, he did note that Lexus is likely to steer clear of the smaller, entry-luxury market segments, even as competitors expand their presence with products like the BMW 1-Series and Mercedes A-Class.

“We decided we don’t want to compete in that segment,” Templin told during a recent interview prior to a media test drive of the new Lexus GS line.  “I don’t have to sell small, small cars,” even if that means accepting less volume for the brand.

“I don’t want an enormous line-up of models,” he added.  “I would rather have a smaller range that covers segments where we want to compete.”

Templin said he remains bullish about the long-term prospects of the luxury car market, suggesting it “will grow faster than the rest of the market” over the next few years.  But he also acknowledged, “everyone wants a piece of that,” especially second-tier players – as well as new entrants like Hyundai.  So, “The pile will be divided into smaller pieces.”

That will translate into a smaller market share for the luxury leaders, Templin projected, especially Lexus.  But even if it isn’t quite so dominant, he quickly added, Lexus will still grow along with the overall U.S. luxury market.


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