They lack identity, and it is trying to get personal with the angular and aggressive lines. Will it transfer to Europe?”
VIENNA, Austria – Lexus is a major player in the U.S. luxury market, trading blows as a heavy hitter with the Germans, but in Europe the Toyota subsidiary is an also-ran; the new NX compact SUV is designed to change all that and turbo-charge languishing sales.
In the U.S., Lexus will sell just under 170,000 cars this year, according to IHS Automotive, not shamed by BMW’s close to 220,000 total and well above Audi’s likely 120,000. But Lexus has been slipping back in the U.S. – it was number one in 2011. However, according to Bernstein Research, this is about to change.
In Europe, after years of trying, Lexus is still really only a bit player. IHS Auto expects sales this year of just over 46,000, up slightly from 2010’s 31,600, but dwarfed by number one Audi’s expected 772,600 and BMW’s 745,000.
Europeans aren’t impressed by the formula that works so well in the U.S., where terrific quality has been backed up by impeccable dealer service. Lexus is perceived as worthy but dull, and can’t compete with the perceived glamor of the Germans.
Over to the new Lexus NX, and the 300h for hybrid is the lead dog in a new strategy for Toyota’s premium representative here – fill out the range with head-turning new models that can draw attention away from its rivals, and re-ignite relatively feeble sales in Europe.
The NX is Lexus’s first compact SUV, and it says the 300h is the first hybrid in this sector. The NX is certainly not bland. The lines, creases and styling cues are eye-catching, and contrast to most previous Lexus models. The styling sets the NX apart from the Audi Q5 and BMW X3 – themselves on the bland side. The sector leading Range Rover Evoque has look-at-me styling. Maybe that’s the secret.
The 300h has a 2.5 litre, 155 hp 4-cylinder Atkinson cycle gasoline engine and a 141 hp electric motor. Zero to 60 mph takes about nine seconds. There’s also a 2.0 litre supercharged 238 hp gasoline version. These versions go on sale globally later this year. Prices in the U.S. haven’t been disclosed yet. The 300h has four-wheel drive, with a second electric motor driving the rear wheels. There’s a front-wheel drive only version. Surprisingly for a subsidiary of Toyota with its leading role in hybrid technology, there’s no plug-in hybrid version as yet.
This lack of a plug-in is a mistake, according to IHS Automotive analyst Tim Urquhart.
“BMW and Audi are investing heavily in plug-ins and to be competitive Lexus will have to go down that route too,” Urquhart said.
IHS Automotive predicts moderately successful sales for the NX in Europe with just under 16,000 in 2015. But that compares with almost 60,000 for the Range Rover Evoque. The BMW X3 should be in second place with just over 54,000 and the Audi Q5 next with 52,600. But overall, Lexus will be a long way behind. In Europe next year IHS Automotive predicts Lexus overall sales of 54,500, miniscule compared with BMW’s 806,900, Audi’s 749,000 and Mercedes at 702,200. Up until 2020, IHS doesn’t see much change in this ratio.
Meanwhile, the NX will be trying to change perceptions.
“There are obviously pretty big gaps in the Lexus portfolio which they are trying to address for Europe and the NX is a part of that. Their cars have lacked a bit of identity and personality for the European market and it is trying to get personal with the angular and aggressive lines. Whether that will transfer to sales in Europe I’m not so sure. They are up against stiff competition; the big three German brands all have positions in the market that are well defined,” Urquhart said.
Europe is still relatively unimportant to Lexus, but it’s recent stumble in the U.S. has worried investors in parent Toyota. This is all about to change, for the better, says Bernstein Research in a report.
“Lexus has faded in recent years due to foreign exchange headwinds, stale products and an apparent inability to compete outside the U.S.- while the Germans have pulled away with relentless product line expansion and better cars,” Bernstein analyst Max Warburton said.
“But we believe Lexus is about to stage a comeback (in the U.S.). Akio Toyoda, head of the company, now has personal oversight of Lexus. Foreign exchange (rates) mean it is again profitable – and these profits are being reinvested. Lexus is planning a major product line expansion and technology push,” Warburton said.