Toyota’s luxury division is doing just fine. It currently sits at number three in the luxury sales chart, behind BMW and Mercedes. That’s a position most automakers probably envy. That doesn’t mean it’s smooth sailing for Lexus. They’ve lost quite a bit of ground since 2010, which was the last time they were the number one luxury brand in America. So what’s the problem? Product. And maybe a lack of vision.
Lexus could use some modern crossovers in its lineup. At the smaller end, the NX and UX have been doing just fine. They’re relatively fresh products too. It’s the mid-size and larger utilities that needed updating yesterday. The RX is nearing its expiration date, although it still sells pretty decently. Its main problem is the third row, which is considerably smaller than the competition. The body-on-frame models are perhaps the biggest problems in the lineup. The GX and LX, which are related to the 4Runner and Land Cruiser, respectively, were introduced at roughly the same time as the cotton gin. That’s obviously not true, but they are very old. And they look even worse when compared to the competition.
That being said, are they really doing that badly? Not really. As previously mentioned, they’re the number three luxury brand in America. Unlike some European luxury brands, their vehicles are actually reliable. And their resale value is hard to beat. Globally, they’re rapidly expanding, thanks to their small crossovers. Lexus also cultivated a superlative dealer network focused on excellent customer service.
The problem is there’s not much on the horizon. Aside from the Lexus LC and LS 500, their car lineup isn’t terribly exciting. There’s no EVs whatsoever coming to America anytime soon. And again, the crossovers are stale. Their market share stands at thirteen percent, which is five points lower than a decade ago. Luxury products are inherently ephemeral. And for luxury automakers, positive buzz is important for future success. A lack of investment from Toyota might spell trouble for Lexus in a few short years. Think about it this way: Lincoln sold about 111k vehicles in 2018. The Lexus RX matched that figure. And that’s just one product. But is anyone talking about Lincoln like they’re in some sort of funk? Not at all. In fact, if Lincoln plays its cards right, the Aviator could win over a lot of Lexus customers who want a modern three row utility vehicle. “Quiet Luxury” was basically the Lexus model before Lincoln adopted it. And it might just be what contributes to their decline, at least in America:
Lexus officials say the U.S. market has not been forgotten by executives in Toyota City. “Behind the curtain right now, what’s going on is that everything — all the attention — in Japan is to get Lexus back in the game with a tremendous lineup over the next few years,” said LaRochelle of the dealers’ council.