Lexus brand isn't flying in Toyota's home market
In trying to establish a Japanese-market foothold for Lexus, Toyota has seemingly fallen prey to the same tactic that made the Cadillac Cimmaron such a maroon. When trying to launch a brand, especially an upscale brand, it's not advisable to rebadge existing models and crank up the price. It doesn't seem to matter how good the car is, or how swanky the new $10-million-a-pop showroom is, once an Altezza, always an Altezza, and paying 20 percent more for the same car with a different logo is rightfully galling.
Japanese luxury car buyers also have quite a taste for European iron, specifically German cars from the likes of Audi, BMW and Mercedes. Enthusiasts in Toyota's own backyard echo the universal car-guy complaint that Lexus vehicles lack personality. There's no denying that Lexus cars are well-made and capable, and the IS-F may finally infuse the brand with enough attitude to woo buyers of storied marques. Currently, most Lexus buyers in Japan are stepping up from Toyota ownership. Less than 5 percent of sales are conquests, and actual sales have lagged behind projections. Lexus offerings have been expanded from the initial IS, GS, and SC models to include the LS, and the RX will be coming in 2009. While it may appear less than successful so far, Toyota can afford to be patient. American buyers have fully embraced Toyota and Lexus nameplates to the point where they're both smashing successes. In another two to three years, we're betting Lexus will have a cheery song to sing in Japan.
[Source: Businessweek]
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Reader Comments (Page 1 of 1)
JGN 4:22PM (3/22/2008)
This is why Toyota and Honda are full of win. Japanese consumers will stand for nothing but the best, and so in order to sell vehicles in Japan, you have to be the best.
GM, Ford, and Chysler would have started getting better a long time ago if consumers had come around sooner and stopped pitying them simply because they are American Companies.
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Tagg 8:48PM (3/22/2008)
It doesn't hurt that the Japanese government has some very strict import standards to protect their industry either.
I don't disagree with you about the Japanese demanding very high quality but the U.S. is no slouch either when it comes to quality. I say that with confidence because that is the reason you don't see any Fiat's or Renault's here anymore.
Lexus fails in Japan because they simply do not buy into the marketing that you can't have a really nice Ford or Chevy. You have to have a Lincoln or a Cadillac to because a Ford or Chevy just isn't good enough because of the badge.
Need proof? Google VW Phateon and you'll see it.
psarhjinian 4:31PM (3/22/2008)
I think it'd be interesting to note what sales of the Windom, Altezza, Harrier or Aristo were pre- and post-Lexus, and if those sales were comparable to their German equivalents.
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psarhjinian 4:38PM (3/22/2008)
Sorry, my bad. The Windom isn't being sold, and the Harrier waits until 2009.
Point still stands, though: what were the Altezza vs. 3-Series vs. C-Class vs. A4 sales in Japan? Or the same for the Aristo vs. 5 vs E vs. A6.
nagmashot 5:45AM (3/23/2008)
60% of all cars over $40,000 sold in Japan are German..go figure..
spw 5:01PM (3/22/2008)
Few things:
- Toyota has Crown brand in Japane, which is IS/GS competition and outsells both MB and BMW together.
- LS is now half of Lexus sales in Japan :-).
They only sell IS/GS/LS/SC in Japan.
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cc 12:16PM (3/23/2008)
Tagg, I don't buy your argument about the Japanese government having more strict import standards... their emissions and crash test standards are no worse than Europe or North America, and German cars aren't horribly more expensive than in North America. (In fact, they're cheaper than the equivalent models in Canada...)
Japan IS protectionist regarding several industries, but they're almost universally industries where Japan has little chance of competing on its own merits... mining, agriculture, etc.
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Tagg 11:01PM (3/23/2008)
They don't broker world deals but rather individual country deals. The import procedure for goods from North America is different that the ones from Europe and even the ones in Europe are varied.
For example, Japanese buy plenty of expensive or premium European cars but no volume brands from any nation. They come in with relative ease because they are seen as premium cars and sell in very low volume compared to other automakers and therefore are not a threat.
Japan has always been very clever with their inspection process too. They often employ a strategy that says "you can import 100,000 widgets but only through Yokohama." That seems ok but then they inform you that they only have enough inspectors for 20,000 widgets and the remaining 80,000 cannot be offloaded from the ship unitl inspected so your ship would have to tay in port for months before being inspected.
This goes for food as well if they are not happy with something. It will sit on the ships or docks and rot and then they'll deny entry because it has spoiled.
I have written a masters thesis on international trade and this comprised a large portion of that paper. Not trying to brag but I just want to illustrate that I am not just talking out my rear either. :)
cc 12:06AM (3/24/2008)
Haha... that's fair... I spend a good deal of time in that country, (and did a little work with a large dealer network but nothing to do with importation), and I was under the impression the days of protectionist measures on the auto industry were gone. (As with so many other things in Japan, it sounds like on paper the measures are gone but the reality is different.)
You're absolutely right about foreign cars being a premium item, too... I have to question if the average person would buy a Chrysler or GM car though even if they were cheap and plentiful, but that's not really what we were talking about.
As for food importation, I know a bunch of people trying to do that and it's a regulatory minefield... not my idea of fun.
SE Abraham 8:01AM (3/23/2008)
The article omits the fact that Lexus brand is badged as Toyota in Japan which is a major factor in reducing the Japanese buyer appetite.
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Pat 8:52AM (3/23/2008)
Try http://lexus.jp
Tragedy 9:04AM (3/23/2008)
Do you live under a rock? The Lexus brand has been available in Japan since 2005. It's funny you say "The article fails to mention". READ THE ARTICLE CAREFULLY and it'd tell you that Lexus cars are sold in Japan as Lexus cars.
Avinash machado 9:46AM (3/23/2008)
Any one know how well Cadillac is doing in Japan? For that matter are Cadillacs sold in Japan?
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stang_fan 11:01AM (3/23/2008)
I've visited Japan several times, and being a "car nut" one thing I noticed was that ALL the car manufacturers have SEVERAL sales arms/brands sold under many dealers. Many models badged as Lexus, here in the U.S., are sold as Toyotas in Japan. Launching the Lexus brand in Japan must have irritated those dealers who thought they were already selling THE top tier Toyotas. (Imagine being a Cadilllac dealer the day GM decides it wants to launch a new "premium" brand).
The Japanese consumer is also very brand conscious...why would they buy a $40,000 Toyota/Lexus, when they can buy a competeing BMW or M-B?
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Richard S. 3:37PM (3/23/2008)
Given the high price of fuel and lack of space in Japan, most cars tend to be the small micro-cars or with small engines. For those that can afford bigger cars with bigger engines, the Germans do very well in that segment.
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Richard Warren 6:04PM (3/23/2008)
That's because they know what it is. A glorified appliance from Toyota. But--they knew we in the US would buy it. Why? Because when it came out it looked like a Mercedes for less money and Americans like cheap, that's how Wally World became the #1 employer in the US.
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Garth 8:50PM (3/23/2008)
The Japanese simply know it's just over priced.
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Thanh T. 1:14AM (3/24/2008)
Hmmm, very interesting article. Total quality management practices did not become popular until Japanese companies embraced improving quality management- business practices.
How is quality linked to an organization's strategic plan and strategic objectives? Who has the ultimate responsibility for quality assurance? (government, politics, management, consumers...perhaps.)
I think Toyota/Lexus luxury brand will do well in Japan. I think markets in Japan are interesting to study. I think Japan has a rich/traditional cultural identity.
I do believe today's younger generations in Japan are attracted to other car companies/markets because of it's uniqueness. Cultural diversity...
Vehicles such as Audi, BMW, Porsche, Aston Martin, Mercedes, Infiniti, Acura, Cadillac and others are great luxury vehicles that performs well.
I think as a company continues to branch out into broader markets around the world, the acceptance of it's products and sevices may ultimate depend on quality.
Very interesting article...
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