Business | Automotives

Lexus set to lose No. 1 spot in US luxury car market

BMW to top in sales first time since 1997

  • Reuters
  • Published: 00:00 July 10, 2011
  • Gulf News

Chicago: Toyota Motor Corp's brand Lexus will end its streak of 11 years as the top luxury brand in the US market due to lost sales in the aftermath of the Japan earthquake and tsunami, said Mark Templin, Lexus Division general manager.

Templin said Lexus US sales will fall about 17 per cent to around 190,000 vehicles in 2011.

The United States is the biggest market for Lexus.

All Lexus models, except the RX 350 crossover sport utility vehicle, are made in Japan.

Templin said the Cambridge, Ontario plant that makes the RX 350 will be back at full capacity in September.

Most Japanese plants assembling Lexus models have already returned to full strength.

However, the RX 450h hybrid SUV will not be at full production until October. The hybrid is typically 15 per cent to 20 per cent of RX sales in the US market.

Lexus US sales fell 38 per cent in June as dealers ran out of key products. At the end of the month, dealers had about half their normal stock.

"June was the bottom of the trough, and we've turned the corner. We see the rest of the year being much better for us," Templin said, speaking to reporters at a Lexus media event in Chicago.

Scorecard

Lexus sales tumbled 18 per cent in the first half of 2011 to 88,010, and German rivals BMW and Daimler AG's Mercedes-Benz sprinted.

BMW's sales rose 13 per cent to 113,705, and Mercedes-Benz climbed 7 per cent to 110,926. If 2011 full year results end as expected, it would be the first time that BMW has outsold Lexus in the US since 1997.

Templin shrugged off the significance of losing the luxury sales crown, and when asked if Lexus could reclaim the top spot in 2012, he said.

"Whether we're No. 1 or not, I don't care. We've never focused on that. We won't change our plan midyear because someone else is selling more cars than us."

BUICK SYNDROME?

Industry analyst Aaron Bragman of IHS Automotive Insight said on Friday the slump at Lexus goes deeper than a shortage of vehicles. He suggested that Lexus could suffer from the same stigma as did General Motors Co's Buick brand for the past several decades: old people's car.

Bragman said it would be quite a challenge for Lexus to reclaim No. 1 in luxury sales in 2012 even with full production because its lineup is not as alluring as it once was and it relies heavily on two models, the RX 350 and ES 350 sedan, a spinoff of the Toyota Camry.

The RX so far this year accounts for 45 per cent of Lexus US sales and the ES sedan 19 per cent.

"Like Toyota, they've lost their momentum. They have an ageing buyer base, and a lot of their dealers are afraid they will become the next Buick. Their new products haven't resonated with younger buyers."

The median buyer age for Lexus is in the mid-50s, and Templin said he is comfortable with that because it is a result of high loyalty.

Sportier models such as the IS sedan and CT hybrid sedan are attracting younger owners, said Templin.

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