Filed under: Car Buying, Marketing/Advertising, Lexus
Lexus poised to be the next Cadillac, but not in the good way
Cadillac's image resurgence sees it vacating its spot as fuddy duddy transport, which it filled for most of the 1980s and '90s. Quality woes didn't help, but overall, the brand induced yawns. Big, body-on-frame barges are still available at the Lincoln store, but there's also a market for luxury cars filled with technology and quality that invokes a ho-hum response. Yes, folks, that means that Lexus is getting sucked in by the vacuum Cadillac left when they went all Led Zeppelin on us. Well, that's not entirely true – what is happening, though, is the age of the average Lexus buyer is sneaking up. Currently it's at 51 years old, while kids who spent the 1980s learning hair metal riffs on their B.C. Rich are choosing Infiniti, Audi, BMW, or even the somewhat fusty Mercedes.
If you were at Yasgur's farm with your Microbus, chances are that you've got a lust to wheel around in an ES350 for your retirement years. The average age of that car's buyers is 61, and only Cadillac, Lincoln, and Jaguar have more buyers north of 60 in this segment. This data has Toyota's fancy division rethinking their future plans, lest they be left in the dust. While Lexus may not release a direct competitor, they're keeping a close watch on how BMW launches its 1-series. The way BMW woos buyers is what Lexus has to do, according to Jim Farley, who recently left for Ford. Younger buyers are looking for edgier cars with a higher degree of technology integration, so Lexus must make a serious run at building a real performer with the IS-F, as well as push design and image. You know they're serious when they plan to broaden the scope of their myownpursuit website to include more than squash on the lawn.
[Source: Automotive News - Sub. Req.]
Reader Comments (Page 1 of 2)
J.Crew 9:08AM (10/16/2007)
This is what happeneds when you don't have your own design language and build appliances for the masses. Old people love reliability and boring safe designs.
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Matt 3:13AM (10/18/2007)
"This is what happeneds when you don't have your own design language and build appliances for the masses. Old people love reliability and boring safe designs. "
I don't see the problem with that. There are a lot of old people, and they generally have more money than the 20 somethings. It's a viable market segment and great for profits. Sacrifice one model, the ES350, and you'll see Lexus have it's cake and eat it too!
psarhjinian 12:10PM (10/16/2007)
They tried to do edgy and sporty with the old IS300. I'd argue it was a more amusing drive than a contemporary 3-Series. People didn't buy it, hence the more luxurious--yet less "fun"--IS250/350.
Rag on Toyota and Lexus all you like, but they have tried to be sporty and the sales just weren't there. Ditto Honda (Prelude, RSX, Legend), Ford (Focus, Cougar, anything SHO or SVT) and so on. Of the full-line makes, Mazda and BMW are about the only two companies that have made a name for themselves by being overtly sporty, and BMW has been dialling down the sport as of late.
Everyone else--everyone!--makes relatively dull cars for the mainstream and luxury markets. Oh sure, some will throw big engines in their "sport" models, but that's not really "sporty", is it.
J.Crew 11:45PM (10/16/2007)
I would have to say that you need to balance boring with some style. That is where Toyota and Lexus are lacking. Real style and a design language. I did not say anything about being sporty. You look at a Benz and you can identify it instantly, same with a BMW, Audi, and even the new Cadillacs. I look at a Lexus and I see generic designs that used to be based on older Benz models that have refined to the point of obscurity. I think the designers had no idea where to go from the original. The new IS-F looks tacky with those goofy tail pipes and huge hood slope. I will not knock their quality or customer service, but their car designs lack passion and presence.
Vivek 9:19AM (10/16/2007)
Caddy buyers age will be coming down further surely with release of awesome cars like the CTS.
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psarhjinian 12:25PM (10/16/2007)
The new CTS doesn't have any more youth appeal than it's predecessor. I'd argue that, with the softening (fattening?) of it's lines, it's age appeal is going to go thr wrong way.
It's a nicer car, sure, but younger people are going to continue to flock to smaller, more agile and, importantly, less costly vehicles. One of the reasons for the 1-Series' existence is that the 3-Series is moving out of the price bracket where younger buyers could afford one.
The cost differential is an important one. Younger buyers have less disposable income (kids, mortgage, lower salaries). Infiniti and Acura have doen very well here by giving younger buyers a fun car with a good image and reasonable payments. I'd also say that both are making a mistake by moving upmarket (the loss of the RSX, the price increases on the G).
paul34 9:23AM (10/16/2007)
Agreed. The newer Lexuses are very comfortable and nice - but in the way that I want a civilized ride for when I'm living in Palm Beach, with arthritis, a cane, and weekly doctor's visits, and are going down to play some Bingo with my buddies at civic center.
Although I know that Toyota hasn't commented, this really shouldn't surprise anyone. I mean, what do you expect? When you make a half-assed "performance" vehicle - only one - and then don't even bother giving it a proper third pedal, even as an option, people aren't going to take you seriously.
If all your performance means is a crazy, ugly, rice body kit, then sorry, that's not serious, that's called rice. My neighbors down the road do the same thing for much cheaper. You can usually track them down at night within a radius of a few miles - just use your ears.
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SouthJersey Guy 9:24AM (10/16/2007)
I really don't understand this article. Lexus currently has brands to fill in the young peoples gap. The IS250, IS350 and the GS350. These designs are not boring or bland. Its understandable that older people choose the ES and LS, but to specifically say that Lexus is not catering to young people is not true.
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Menice 9:39AM (10/16/2007)
its not that they are not catering to a younger crowd, they just arent hitting it off with the younger crowd.
IS is a good looking series, just misses the boat....and vehicle seems to not draw the buyers from the competition that lexus wants.
out of these names....
Audi, BMW, Infinity, Lexus
which one do you associate with the older generation of buyers?
which one would younger buys steer away from?
CH 1:15PM (10/16/2007)
SouthJersey Guy, you are quite correct.
The IS has a younger buyer profile than the Acura TL, BMW 3 Series and Infiniti G. The Lexus GS has a younger buyer profile than the Acura RL and Infiniti M.
In fact, the IS has the youngest profile in its segment and the same looks to be true for the GS.
From JD Power, % buyers 16-35/36-55/56+ years old:
Lexus IS - 44/42/14
BMW 3 - 35/46/20
Acura TL - 36/44/20
Infiniti G - 35/50/15
Lexus GS - 22/50/28
BMW 5 - 8/66/26
Acura RL - 8/43/49
Infinit M - 13/53/34
(Data for 2007 models, except 2008 for BMW 5 Series)
Steve_S 9:35AM (10/16/2007)
Lexus mimics Benz more than anything. They offer almost nothing to an enthusiast just Like Toyota offers nothing in the way of a sports car. Lexus are cushy and soft and reliable. It’s why people have bought them. No need to change now. People who want a driver’s luxury car will go to BMW, Infiniti or perhaps Audi.
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paul34 9:49AM (10/16/2007)
Right, but MB knows how to build a proper performance car, even if it is an automatic. Refer to the AMGs... now there's performance!
Takeo 11:21AM (10/16/2007)
Maybe they do have a performance car in AMG, but I would not pay that kind of money for Criminally bad reliability and questionable quality.
Mallory 9:39AM (10/16/2007)
Since Toyota is the new (old, bad) Buick then it's fitting that Lexus be the new (old, bad) Cadillac. I never really thought of it that way before but after seeing the article it's definitely true.
Not that this is necessarily a bad thing becasue there's clearly a market for vanilla cush-mobiles for the old folks. Heck, look how good the Crown Vic and Town Car still sell.
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wrussi 9:47AM (10/16/2007)
"young" my boss is 60 and he thinks he's young.
the thing with lexus is that the ride is not exiting at all very comfortable but not fun to drive. they are not performance oriented at all. and they know it. in an effort to attract performance oriented buyers they came out with the limited is-f wich is overly expensive!!
if i want similar power much better handling and have the dough, i rather get the new 4 door M3
and for their entry level model the is250 which is very nice looking outside but slow (compared to the acura TSX i cross shopped with).
to have a decent equipped IS u have to spend over 40k which i think its ridiculous when u can get 100 hp more on a 335i at least with the premium package. for about the same price! and with better interior because one thing i really hated about the IS is that the interior feels cheap feeling dashboard and controls. i felt like i was in a souped up yaris
one thing acura and infinity have done is that they give you the best bang for the buck and most young people want that. with comfort being second
acura has problems of its own (lack of RWD) as well but thats another topic
lexus seriously needs to come up more performance oriented models. not the ricy looking is-f but a better suspension and have competitive prices!
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MacGuffin 10:08AM (10/16/2007)
You'll have to remember that Lexus (in 1989) was initially targeted to Cadillac and Mercedes-Benz buyers.
This target was primarily baby boomers who are now beginning to hit retirement age. Most of its current line-up doesn't speak to anyone under 40, even if they can afford their vehicles.
TMS, in general, is struggling to reach a younger buyer. And it has yet to develop a really effective strategy to do so.
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MikeInNC 10:09AM (10/16/2007)
I agree with Steve S although I think Merc does a lot better job on styling and offering performance choices (AMG) than Lexus.
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Afterburner 10:43AM (10/16/2007)
As an owner of a Gen I IS300 (aka the JDM Toyota Altezza ...) , I can attest to the downward trend of the Lexus brand. The Gen II IS, though certainly more upscale and comfy than my IS300, lacks the sporty character that the IS300 brought with it ( probably the only Lexus ever that could be defined as sporty...) and instead chose to go the way of greater displacement instead of superior driving dynamics.
I cross-shopped my IS back in 2004 with the 330i/ci , the G35. MB C320 and the Audi A4 3.0, and picked the Lexus over them all, since IMO, it beat all but the BMW for pure driving pleasure, and it outdid all the others in terms of build quality, reliability and comfort ( the BMW 3er and G35 had HORRIBLE interiors). the fact that it had the Supra block 2JZ Inline 6 made it a no brainer for souping it up if I ever decided to...
What has happened now is Lexus is not concerned with the average 25-35 y/o buyer. Their focus group, even with the new IS' is right about 35, since spending 45K or thereabouts on a well -equppied IS350 is not an easy ask for most below that age group.
Its all about the money folks.. Lexus markets to those that can afford to pay more, and builds only for those markets... it does not want to , or even NEED to compete in the younger segment where the profits are lower, and identity dilution is an issue.
Too bad for them.. my next car will not carry the famed L.
TriShield 10:25AM (10/16/2007)
Lexus builds a better Cadillac today than Cadillac does. Contrary to popular belief, there is a substantial market out there for people who just want to be coddled in luxury cars.
Everytime I drive a Lexus it reminds me of what older people said about Cadillac during the brands heyday. Supreme comfort and isolation, the finest materials, the best workmanship, and technological innovation.
I'm sorry to say, Cadillac doesn't embody those principals today. The brand sells some decent cars, but none of them stand for what the brand stood for when it was the Standard of the World.
GM abandoned this market and destroyed the brand, Toyota has filled it. GM did this to themselves and there's no excuses for it.
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David 10:30AM (10/16/2007)
To these eyes, Lexus has made some mistakes. The GS350 is way overpriced for what it is .. it's loaded with profit for both the dealership and Toyota leaving not much for the actual buyer ... The Cadillac CTS has more style both inside and out (and I am not a fan of American cars and haven't owned one in 18 yrs).
The GS460 didn't get the full tune V8 used in the LS like everyone expected. The LS460 is bland next to a Mercedes or BMW, both inside and out, but fast approaching both in price. It really seems overpriced at this point. The LS600 is an overpriced joke that barely gets better mileage than the 460. How much did it cost to develop that thing anyway?
The IS350 is ok but bland for the price. I have driven one ... and one thing that stood out was all the clicking from the fuel injection system. It sounded really bad. The new 335i has a more personality and more visual pop. But I think that the IS is one of the more competitive cars in the Lexus line.
The new LX looks like a ripoff of a Lincoln Navigator from the rear and kind of awkward everywhere else. The RX is a chick car.
The ES350 is overpriced for a gussied up, soft riding camry. I have sat in both the new accord and the ES and the accord seems nicer on the inside for 10-15k less.
I remember when Lexus sold on their price and excellent assembly quality. They never really handled that well compared to the competition, or had the best styling and those are things they need to improve on. Now that their price is creeping right up next to the competition and their quality is suffering they are going to have to come up with some more tricks to get the younger gen back.
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