Lexus reportedly aiming to please younger generation, compete with entry-level BMWs
2010 Lexus IS350 C - Click above for a high-res image gallery
When Lexus was founded in 1989, it appealed to the staid sensibilities of its 45-year-old demographic. Now, those buyers are in their mid-sixties, and Lexus, faced with a 34.1% sales slip for the first six months of the year – more than its primary rivals from Germany – is rethinking its line-up and consumer experience to appeal to younger buyers.
Speaking with Automotive News, Lexus execs admitted they've grown too dependent on sales of the RX crossover, and in an attempt to right the ship – and score sales from BMW 3 series coupe and convertible buyers – they've begun a new push for the IS sedan, and in particular, the new IS convertible.
In addition to the droptop and recently released HS 250h hybrid sedan, Lexus wants to add an array of entry-level models into its line, including more "green" vehicles and sports-oriented models. The automaker's Taste of Lexus events held around the country to woo buyers into showrooms with ride-and-drives and hors d'oeuvres – reportedly costing around $1 million per city – are going by the wayside, and instead, Lexus is pushing its dealer training program to ensure top-notch service, along with a focus on tech-rich features and new, edgier ad campaigns.
Although the RX is still outselling all of its nearest competitors in the luxury crossover segment, Lexus realizes that it has to offer buyers more, particularly those in the coveted 25-35-year-old demographic. Hopefully, that means more high-performance and fuel efficient models, and less confusing (if artsy) advertising campaigns.
[Source: Automotive News – Sub. Req.]
Reader Comments (Page 1 of 3)
vf34wrx 2:03PM (7/13/2009)
Not sure if they checked the demographic, but how many 25~35 year olds can afford a $40K car? $30K in loan is like $600/month in payments.
Reply
zamafir 2:06PM (7/13/2009)
Depends on the market. In California? Enough to make it worth their while.
BigMcLargeHuge 2:09PM (7/13/2009)
You're looking too hard at the bottom-end of this demographic. By the time you get to ages 30-35, I'm sure the number is quite substantial.
Bobmarley 2:29PM (7/13/2009)
There are a tone of college grads that can afford these cars straight out of college...believe it or not there are a decent amount of 25 year olds that have made it through high school and college without slacking off or having unplanned babies
Farmboy 3:16PM (7/13/2009)
There are also the morons who get credit cards. I remember seeing on CNN or HLN (I forget, been a while) that college kids with credit cards are buying super expensive stuff and are in horrific debt. A lot are buying luxury cars. One kid was paying for 2 cars. A Lexus and a BMW.
hiroprotagonist 3:29PM (7/13/2009)
Actually, I got mine at 26, so they did a good job hitting the demo. When the IS was first introduced, I was hooked. I grabbed the first IS350 specifically because I liked this new direction of Lexus, and it wasn't the all-too-common BMW 3-series that everyone seems to get. It's a fantastic car, and a great start for what they are trying to achieve.
They need to address the total-cost-of-ownership, however. Service for this car is ridiculous. I have no issue with $700-$800/mo car payments, but the routine service, brakes, tires etc. are a real pain in the butt.
Adis 5:32PM (7/13/2009)
Ahhh, given that I do live in California, but thats i think does not have anything to do with it... I own a 2008 IS 250 and do not pay 600 a month...
But there are many 25 - 35 year olds that drive VERY nice cars... come to Glendale, CA and youll see 21 year olds with M3's that have about 15k worth of upgrads.. and seeing 200k+ cars are VERY normal here...
Buds 4:09PM (7/13/2009)
I'm 25 and own an IS (and no Mommy and Daddy did NOT help me). The IS has attracted quite a few young buyers, hence the popularity of the Club Lexus and my.is forums.
Bird 4:11PM (7/13/2009)
Whether a college grad can afford this without going into debt depends a lot on where he lives and what industry he's in.
E.g., if you're an engineer out of a good school working in the middle of nowhere places typical engineering firms are located, I'm sure you could pull off affording a $40K car out of college on a payment plan if you cut back a little on other things.
Though I really doubt anyone responsible enough not to be in debt would even consider a $40K car as a first car out of college.
Luis 4:19PM (7/13/2009)
I love the IS design, but they have some work to do on the engineering/performance. The IS250 RWD manual is the only worthy option in my book, and it's a lame competitor to my 328xi manual. Bump up the power, give it AWD and a stick and I'll consider the L-brand the next time around, but for now I'm hooked on Bimmers. (31yo here)
Vince 5:52PM (7/13/2009)
BMW got there with lots of undervalued leases ($399/mo). Now they're getting burned with all the 3-year old cars that are worth less (and even less without the warranty) than BMW has put into them.
Lexus may well do better than BMW since in reality they do have better residual values.
bmw4dea 6:15PM (7/13/2009)
I'm 22 and I am currently on my third BMW 3 series. And no, I did not receive help from mom in dad, however when I purchased the first 2 i was still living at home with mom and dad. But by the time I had purchased the 3rd I was out on my own. And yes I live in California.
zamafir 2:05PM (7/13/2009)
makes sense, I'm seeing a lot of people in their teens-twenties ditching their BMW converts in Rowlannnnnn heights for these already. Hopefully the demographic a decade up (the 25-35) will be as adept to embrace them.
Reply
Todd 2:16PM (7/13/2009)
Just read this, thought it was relevant:
"Dear Old People Who Run the World..."
http://blogs.harvardbusiness.org/haque/2009/07/today_in_capitalism_20_1.html
Reply
ChrisL 2:31PM (7/13/2009)
The article in the link is absolutely correct. We've been seeing this approach from our younger clients for several years already. (architecture)
The very IDEA of 'luxury/exclusive' is counter-intuitive to the generations following. They've seen thier boomer parent's generation sell out completely to greed and self-indugence and they want NO part of it. They have been raised in communal situations like daycare and appreciate "WE" over "ME". Yup, the new bling is no bling at all. (the Paris Hiltons of the world notwithstanding)
VW's Up range of cars or even the Tata Nano is where we're heading - Toyota take note of what kei class cars you're selling and prep them for here NOW.
Lexus? Um... no, too 'image' for the new-hippies following.
geo.stewart 3:14PM (7/13/2009)
ahh yes, the rant of the 20-something. I did it, my parents did it, their's did as well.
the aboslutely FUNNIEST part is that the guy talks about microsizing economies and then includes Obama, who wants to macrosize the government. the only jobs that he has 'created or kept' have been government jobs, not jobs that create, design, build, service, or maintain anything but government jobs that leech off of the economy.
I think the grandiose dream and meaningful mission statement are terrific. but never forget that most of that wealth amassing was an effort, misguided if you will, to provide for their children (you) and for most of those out there with paid college diplomas, you selfish thankless SOBs can take your rant and shove it. For those who worked to pay their own way through college, you have what it takes to effect the change you want.
Serge 4:12PM (7/13/2009)
"We want authentic, deep democracy — everywhere."
Sounds exactly exactly like a pot smoking, rich parents, college kid who spends time getting STDs from mediocre-looking girls would say... exactly the type that would buy this "vehicle"...
william lin 2:20PM (7/13/2009)
in California that 25-35 demo is pretty much buying 30-50k cars. One just has to roll around the beach cities or the san gabriel valley to see the plethora of kids driving: all sorts of japanese hardware mostly WRX sti, EVO's, 350z, G35/37, and S2000's + a smattering of bmw 3's, A4's, and c-class benz.
I think if lexus made a 6mt is350 (use the diesel engine is220d transmission) it'd help capture some of this demographic. It already out here has gotten the asian female under 30 demo: the IS350/250 is one of the most common young asian girls cars (the IS and the TSX).
Reply
BoxerFanatic 2:21PM (7/13/2009)
This is assuming further economic growth and wealth generation, and a return to statistically full employment, not unemployment, nor UNDER-employment.
There is no way in God's green earth that I am spending that much money on a car without at least TWICE as much pay as i am making now. The budget can't handle it, and it is getting WORSE, not better.
My employment has been flat for a while now, and those that I know who are looking for jobs, are finding nothing, or extremely high levels of applicants.
My cars are paid off, and are going to stay that way, as long as possible. It would be hard enough to actually cut a slice out of the budget to aggressively save to buy a new car with cash in the next few years.
This stuff is going to get a reality check. Easy credit is not so easy anymore. Wages are flat, or down, and unemployment is up, and under-employment is even MORE up.
With the political scene the way it is, taxes are going to be going WAY up, and everything is going to be costing more, due to that.
Economically, we're being told that "the easy-money party is over. You don't have to go home, but you can't stay here..."
Lexus is going to need to come down market, just to come down market, but chasing 20-somethings and early 30-somethings is not going to be as easy as you all seem to think.
Reply
BigMcLargeHuge 2:59PM (7/13/2009)
It will take a while for the feedback loop to slow the downward
spiral.
Right now the cycle is:
unemployment goes up, available credit goes down (less people with
jobs), companies discount goods and cut costs, another round of
layoffs....
unemployment goes up, credit goes down, companies cut costs, another
round of layoffs....
and so on...
For now, that gives the employed a lot of purchasing power. We're literally becoming the 'haves' and 'have-nots'. There won't be an up-market and a down-market pretty
soon. Those that can afford any new car will essentially be 'elite'. (And more and more of them will be bureaucrats, but that's another story)
But people like to think that this necessarily has to 'bottom out'
and recover. And that is naive. There is a lot of false optimism
about where our economy is headed.
It all adds up to the income gap growing. This 'bottoming out' will
mean the companies that were previously cutting costs will have no
choice but to inflate prices to offset their low-volume.
You're literally looking at an America where only the rich can buy new. Very
3rd-worldish.