In the US, the 1989 Lexus LS 400 turned the luxury market upside down, one of the few genuine game-changers. It was cheaper than a six-cylinder Mercedes E-Class, yet offered V8 S-Class room and performance. And its softer ride than the Mercedes’ autobahn-tuned suspension was very much to the liking of Cadillac owners. The LS 400 perfectly created a new sweet spot in the market: Mercedes-like quality; Cadillac-like ride (but not wallowy), and Toyota-like reliability. Both Mercedes and Cadillac had to makes big changes to try to compete effectively; Mercedes cut quality and its prices, and Cadillac tried to step up its game.
Who was affected more, and was it for better or for worse?
Cadillac destroyed its reputation in the 80’s with a series of fiascos. Mercedes was the real victim. To compete Their cars were no longer over engineered and made more flashy. It’s was the death of a great brand.
uhm…”death”? seriously???
Now then, how’s the situation 25 years later ? S-class vs LS, the sales numbers.
Johannes, I think only over a very short period of time did the S-Class lose its luxury segment sales crown.
And that was to the BMW E32 on the German market shortly after the E32 was introduced, and globally to the BMW E38 as the Mercedes W140 was only kind of popular in the US and Asia but not elsewhere.
But in total the S-Class has been the segment leader ever since its debut back in 1972.
It explains the problem of Mercedes
What is a Lexus? OK, I’m not being serious, but I never quite understood the Lexus phenomenon in the US: they have been on sale here in Austria for years now and consistently fail to attract anything more than a few buyers. I think Toyota Austria does not withdraw the brand of the market because it would be akin to a loss of face, something which the bosses in Japan would never allow.
The essence of the whole story, T. Turtle: Lexus is a North-American phenomenon.
Lexus / Toyota also says that they well never offer a diesel again (the Lexus IS had a 2.2 liter diesel once). Well then: goodbye.
I just checked the Austria statistics office’s site: They sold (very slightly) more Lexi than Jaguars in 2014 but what is even more amazing, both Maserati’s and Tesla’s (!) sales amounted to roughly half of what both of the above sold… Don’t even ask how many more Audis, BMWs or M-Bs sold during that period. Like I said, I don’t understand Lexus in the US.
Oh yes, Infinity managed to shift 32 cars (phew…). In a country with 8m people living in it.
As someone once said, Mercedes Benz used to produce the finest automobiles in the world, now they just make cars
This. Mercedes may sell lots of cars, but it defies belief just how inferior they are in purpose compared to what they made before Lexus. OTOH, reunification pretty much took the excellence out of everything ‘German.’ West Germany made many of the best cars the world has ever known. Germany makes gauche rolling gin palaces for nouveau riche Chinese and compliance cars for compliant people.
So what “nation”, would you say, produce cars to your personal liking and high standards of automotive craftsmanship?
To be honest, M-B had a bad period during the late 90s early 00s. But they realized it and the quality is now very much on high levels. Same thing with Opel – I seriously would consider an Insignia if I, like one of my work colleagues, had to cover Vienna to Klagenfurt on a weekly basis. Two years of ownership and no problems whatsoever. Can hit 230 Km/H with ease, quite, comfortable and handles and I believe what contributed to Buick’s higher marks in some US consumer reports (as you know, it’s offered there as Buick). If anything, the one getting too fat is VW (but not Audi).
Mercedes by far; they had to cut the price on the E400 by about $10K in ’93 or ’94. Which really incensed the ’90-’92 buyers when they lost that $10K overnight in resale value on their cars. General Manager at a MB dealer told me this at the time. The cost cutting quality hits came later, lots later.
Cadillac was just starting to get with the program with the Northstar engined cars. It wasn’t until after the turn of the century did they really start the change in what they built…
And that was when all of GM was in a panic, not just Cadillac. Is it possible to separate Cadillac’s woes from GM’s woes in this time period?
Cadillac was already working on the Northstar V8 and I think they were developing the platform that the 1995 Riviera and Aurora were based on. Cadillac knew that the 86 Seville had been an error and they wanted the 92 Seville to get the new platform. However, Cadillac did upgrade the FWD deVille platform to give the 92 Seville some enhancements. The Deville’s were then upgraded for the 94 model year.
I think that Mercedes was probably the prime target of the Lexus. If I recall right, the Lexus started out at about $40,000. I don’t have a price guide for then, but by the mid 90’s its $50,000. Mercedes E-class is $40,000 to $50,000 too. Cadillac is cheaper. Looking at Cadillac’s production numbers, they seem to slide during the 90’s, but I doubt that this is entirely due to Lexus.
The sliding sale of Lincoln Continental most likely leaves the room for Lexus ES. It’s the same concept, building a reasonable priced roomy luxury sedan with as many as possible borrowed parts. Similar to 1988-1994 Lincoln Continental, the current Lexus ES would look as bad as that 20yrs later, but they were/are both hot seller as a new car ( both based on good selling mainstream sedan also ) The ’95 restyle went too wrong, as Mark VIII inspired doesn’t work out well on many models. ’98 restyle brought it too close to Town Car instead, and that’ the end ( not helped by the dated platform, even though I can’t say too much better for Lexus ES neither) Lexus, however, has a slow selling LS ( 8559 sold last year in US. For Lincoln, they would pull the plug long ago. 17578 is pretty thin to spread all over the world in 2012 ) and a hot selling ES, and that’s where the profit comes from. ( I don’t believe current LS brings much profit though )
I think it hurt Cadillac the most but Mercedes felt it too because they had to make price changes & MB owners who switch to Lexus loved not getting their heads taken off at the service dept.
Hard to say. I don’t think Lexus had any great impact on Mercedes-Benz’s reputation or brand cachet, although as others have noted, Mercedes had to get much more aggressive on price, which can’t have done the balance sheet any favors.
I think Cadillac’s fundamental problem in the ’80s was that (with the exception of the Allante) they spent the decade trying to scale down their traditional formula with varying degrees of credibility and really missed the boat on the tastes of Baby Boomer yuppies. There was really not much chance that an affluent Boomer was going to trade the Audi 5000 or the 318i for a Cadillac or Lincoln anyway; it was just a massive philosophical divide. I know there were some younger people who were really waiting for Cadillac to offer a credible rival to the high-end import luxury cars if only so that they could uphold their nationalism without looking desperate, but for the most part, I don’t think Cadillac was on the radar of the target market.
Well said. For anyone under 75, Cadillac was finished as a super-premium brand by 1989, having so badly damaged themselves all through the 1980s. Lexus swooped in and took a significant part of the market that might have gone to Cadillac had there been no credible competition but Mercedes and Lincoln.
Mercedes was hurt because for the first time, something perceived as being just as good was now selling for way less money, putting price pressure on the German car for the first time in a long time.
So, I guess both were hurt, but in different ways.
And the 70s as well. It would be very interesting to see when exactly the worm turned. I know Paul has pointed to the late 50s/early 60s as the period when serious luxury buyers turned to European cars, but Cadillac, Lincoln, and even Imperial managed to compete for those buyers well into the 60s.
I believe the W108/9 series S-Class was a real turning point – they looked gorgeous, we’re brisk but rode smoothly – especially the air-suspension 300s like the ’68 300SEL and ’71 300SEL 3.5 I had the pleasure of owning.
And throughout their 1965-71 model run, they kept the real wood, metal trim and other fit and finish materials that were rapidly being de-contented out of the ever-bloating Big 3 luxury brands.
A big, truly luxurious car had some arguable advantages over a Mercedes. A big, faux luxury car did not.
Paul, I think your description is spot on correct with one exception; both Mercedes and Cadillac were in a decline due to quality, fit and finish and customer service. Add to that the fact both had just had a run of turning out some crappy engines and models.
My family was driving Cadillac’s (Fleetwood and Seville) and Mercedes (E and S Class) at the time. We left both Cadillac and Mercedes, and have never looked back. We would not even consider another new car purchase other than Lexus for now. But as soon as someone “one-ups” Lexus we will all be winners as the bar will be raised for all companies yet again.
I know the Lexus haters have got to hate, but this is our well proven findings and experiences. I wish my doctor treated me as well as Lexus. Have at your own opinion as we all have to find what works for us.
Lebaron raises an issue that hasn’t really been covered in these car-centric responses. A big part of Toyota’s Lexus strategy was the reinvention of the dealer and service experience, to make it far less oily (literally and figuratively). When the brand first launched people I know were as ecstatic about the dealer experience as they were about the cars. Did it change the game long term for other car makers, though? Well, the “stealerships” (as my independent BMW guy calls them) are a lot nicer environments but not so sure. But not having darkened M-B dealerships pre-Lexus, I can’t say.
When I saw the Lexus Covenant below, then experienced it I was ready to crush my family’s Cadillac and Mercedes. They pretty much delivered us to the Lexus showroom. Lexus haters can hate all they want, and I think understand their frustrations, but a Lexus does not often break and your are treated the way one should be. Have the others learned? No, and their balance sheets prove it.
THE LEXUS COVENANT
Lexus will enter the most competitive,
prestigious automobile race in the world.
Over 50 years of Toyota automotive experience
has culminated in the creation of Lexus cars.
They will be the finest cars ever built.
Lexus will win the race because:
Lexus will do it right from the start.
Lexus will have the finest dealer network
in the industry.
Lexus will treat each customer as we would
a guest in our home.
If you think you can’t, you won’t …
If you think you can, you will!
We can, we will.
Which honestly is a big reason for the success of the ES, even seeing it as basically just a fancy Camry. Plusher interior and trim notwithstanding, it was a modest premium for a longer warranty and VIP service (not an area where your average Toyota dealership is going to win a lot of prizes either).
I don’t really think you can say that Mercedes was *already* in a decline due to quality or fit and finish in 1989. Think of their lineup at the time–the W126 S-class, W124 E-class, W201 190E, and the brand-new R129 SL convertibles. All those are still viewed as part of the old-line Mercedes, with bank-vault dynamics and impeccable quality control. Sure, as they aged the electrics started to act up in many cases, but what luxury car didn’t have that problem at the time? Not a bad one in the bunch, and all of the overengineered, high-quality, “classic” Mercedes school of thought. The very real drop in M-B quality came much later as a *result* of the LS400’s ascendancy, with probably the most notorious example being the W210 E-class.
Cadillac? They weren’t just *in* a decline, they were near or at rock bottom in ’89. Had the 1992 Seville been less than it was, they would have been in the near-terminal position that Lincoln finds itself today. They had already alienated their buyers and taken themselves off the radar.
Mercedes really only lost out to Lexus on price and dealer/service experience–not on the quality of the cars. It took a while for it to become evident that everything about the car, even the electrics, would hold up as well or better long-term.
Chris, I completely agree with you on Cadillac. As a past and current owner of each model you mention I can assure Mercedes was in a serious decline in 1989 in terms of fit and finish. Their wood trim was at an all time low in the W126, plastic interior bits breaking, interior squeaks and rattles, some terrible engines, and most of all customer service. All these reasons are why Mercedes was so hurt by Lexus.
The S-Class generally outshined everything else until maybe the second generation A8 was introduced. I think Caddy was the real loser here. The LS was a breath of fresh air. Really nice interior, decent exterior styling and you got the Lexus dealership experience. I mean that V8 in the LS was almost bulletproof and really quiet. I think all you needed to do with that car was to test drive it and it sold itself.
The luxury class dominating W126 S-Class was built up until 1991.
It sold more than 800.000 units since 1980, which was an all time high for any luxury car, and was at the end of its life when the LS400 was launched. I remember, how the magazines marveled at the technical brilliance of the Lexus, yet made it clear at the same time, that its was more or less a cheap copycat of the W126.
When the successor W140 S-Class was launched in 1992, it had to share the spotlight both with the Lexus (in the US) as well as with the BMW E32 (in the US & rest of world), which resulted in half the sales figures of the predecessor. The market for luxury sedans had changed quite a bit.
Thus, except for the US market, I would guess that the Lexus was a minor headache to the guys in Stuttgart.
I had, still have, an 87 300SDL. It was the last good diesel Mercedes put in the S-Class. The 91-95 S-Class engines were junk and Mercedes would not stand behind them and class action lawsuits went no place. My car has a great engine but by 87 the interior integrity was crashing and burning.
By 1996 BMW had finally figured out what a luxury car should be, which was yet another stab for Mercedes.
Lexus a cheap copycat of the W126?? No chance. The LS I moved to had far superior wood and leather than my S-Class has. The only lacking part of Lexus I find is the tenderness of it’s paint. The finish is superior and sharper than BMW or Mercedes as all those models had and still have orange peal. I do not know why BMW and Mercedes haven’t fix this and the durability of their paint was excellent.
It sure was no copycat of the W140 😉
The W140 was an improvement over my W126. I wish the diesel in the W140 had been worth a damn. It would have been an extra car for me instead of the 97 E-Class diesel I now have. I almost never drive the 87 SDL.
the 350 SD was a 5 cylinder turbodiesel, wasnt it?
I heard it was not exactly a MB milestone and would collapse early.
“Thus, except for the US market, I would guess that the Lexus was a minor headache to the guys in Stuttgart”
Actually Lexus was a major headache for Mercedes due to the US Market. The USA market was vary important(and to an extent still is) to the folks at Benz and probably more so then the German market as Mercedes Benz was billed as being luxury and its ad company put together ads that told you that if you owned a Benz you had arrived. In other parts of the world a diesel 240D or 300D was bought by folks to use as taxi cabs and as delivery vehicles(the 300D wagon) but in the USA those cars and their wheezing 50-60hp diesel engines were marked up and sold as luxury. Mercedes Benz even lobbied congress to pass a law that banned importing gray market cars because it was cutting into the folks from Stuttgart’s profits and thus forced Americans to pay mark up prices on decontented Benzes with the weaker engines instead of offering the better engine in the first place.
When Lexus came in, folks saw that you could get a luxury car for a reasonable price which was reliable from a dealership that was not full of arrogant douchebags that seemed to imply that you were not worthy to buy a Benz. and went over to Lexus.
Sure Toyota seemed to “copy” the W126 but in the end the Lexus LS was more reliable by leaps and bounds .
I never knew the W126 had a reputation for being unreliable cars….
Wasn’t the W140 much more expensive than the LS? I mean those cars were the equivalent of Russian typhoons. The nice thing was that a baby boomer could have a car that was as comfortable and fast as a 140 but 15k to 20k cheaper (comparing it to an S500). I Remember when my father borrowed a friend’s S420 to drive it to my grandfather’s funeral and couldn’t believe how wide the car was. He said this is what driving a Hummer must be like.
The LS was a perfect car for the time. Still love those 90s Lexus interior layouts and dash clusters.
Also, I’d like to mention the first gen Q45. Is always eclipsed the the Lexus but I really liked those too. Japan was kicking it into overdrive in the early 90s.
Lexus had a huge impact on Mercedes. As I understand the situation, Mercedes was building ever more expensive cars and building them hap-hazardly. The British magazine CAR reported that by the late 80s/early 90s M-B was taking almost as long to re-build cars that were poorly assembled as it took to build the cars the 1st time.
Both Cadillac and Mercedes FINALLY had to admit Toyota’s (and all the major Japanese brands) philosophy of “just in time” parts delivery to the assembly line was THE model for inventory control and by extension cost control.
The CAR magazine article was probably about the book ‘The Machine that Changed the World. Couple of MIT professors managed to talk their way into Nissan and MB. They figured it took about 45man hours to screw an LS400 together. MB was using about 90man hours and then that again in the repair area fixing all the fouls ups. They also mentioned some screw up under the dash on the MB, would be bright plated, the Tri-point logo and a 10 digit part number stamped into it. MB had to get rid of all that nonsense right now!
I took the tour of the Mercedes factory in Sindelfingen in ’95 and they were heavily promoting their use of using just-in-time inventory with an archipelago of supplier plants nearby.
Mercedes screwed themselves going for the fast buck with quality-shrinking cost-cutting and becoming a follower instead of a leader on styling, implemented by, as CAR magazine referred to him, Jurgen Schrempp The World’s Worst Auto Executive.
Cadillac had already imploded by the time Lexus came along. They remained stuck in their golf-pants-and-white-shoes aesthetic; their downsized vehicles were weirdly shrunken versions of 70s luxo-barges that pleased no-one.
Although as various observers have concluded — and some automakers have found out the hard way — actually implementing just-in-time production is a complex and involved process. It’s not just a matter of saying, “Okay, we won’t have big inventories anymore” and changing your invoice forms.
Until Lexus Japanese cars competed against Ford/Chevy/Vauxhall/BL.Lexus showed the big boys at Cadillac,Mercedes and Jaguar that they were serious.The opposition upped their game to stay with Lexus.
my dad has a 2000 LS400. Its got all kind of electronic goodies and has been very reliable. My dad and his wife are the original owners and the only time my dad has had to wrench on it is for changing the timing belt and water pump.
That all being said it is a boring car and seems like something that Buick should have been making this whole time. The car has zero personality. Its not ugly but they arent hot either and nobody ever turns around to say “woah that there is a sweet ride your got dere!” They look too much like an LS300 which is a tarted up Camry.
I would much rather have an Infiniti M45 of the same vintage. Preferably in all black limo style
I think the bigger impact was on Mercedes. As JPC et al have said, US luxury was pretty much in terminal decline by the time Lexus came out. In addition to the price competition, MB also had to change from being a German automaker to a luxury automaker. The simplest example: as far as I remember, even the w126 S-class would have a manual driver-side mirror–passenger side was remote adjustable, but not the driver side one. Why? No added convenience. The trunk-lid would lock or unlock with the central vacuum door lock system, but there was no remote activation or automatic pull-down. Why? Who needs that?!
For better or worse, Lexus was the end of prescriptive motoring. The Europeans may never have made a truly decent cupholder, but as far as I know options and convenience features now line up, as near apples-for-apples as possible. Some things that are standard fitment on other cars may be options on the Germans, but MBs seem no longer to observe the “engineering/gadget” discipline of the older ones. Old MB would’ve told you you shouldn’t be driving any car, let alone theirs, if you can’t tell what lane you’re in; new MB advertises automatic lane correction on leaseable vehicles.
I don’t know how much of the old MB way was driven by the relatively small capital/investment available to MB compared to Toyota (limited resources for developing cupholders), and how much of it was really cultural (the engineers hated cupholders) or contractual (old MBs were hugely proprietary, there may not have been a zebrawood farm with enough influence to pitch their awesome cupholder to the execs). Either way, MB definitely struggled with the price/feature standard set by Lexus. The revolution affected all the Euro makers in the USA–where do you think Porsche Cayman and Macan came from? See Paul’s article on the Lexus RX300!
For Cadillac, I have to say, the Chuck Jordan Seville was, in my opinion, the best-looking car they had since the first year of FWD Eldorados. Coulda been a contender, though the planning probably preceded the Lexus. But nobody was gonna tolerate shop-diva manners when they could just…get a Lexus.
Chuck Jordan had too many nameplates to save by the time he was in charge. And not every model worked out, like Caprice. ( even though I feel it’s better designed than Crown Victoria ) and Oldsmobile 98 was too conservative in a not so appreciating way ( opposite to Park Avenue ） But he is the last good designer from GM in general, as the later design only shows how limited later designers were ( G-Body SeVille is nearly identical in shape comparing to Chuck’s SeVille )
Cupholders! Now there’s the real difference between European and American cars. And strollers and baby seats btw.
Yep, Europeans didn’t have time for that nonsense. Or, if they did, they tried to hide them in clever places. My Volvo 780 has cupholder trays that pull (front and back) out of the center console cover/armrest and drop down, and then slide flat as they are retraced back into place. Clever system and less fragile than it sounds, but you can’t put a Big Gulp in it. Same deal with the passenger-side cupholder in a first-gen Mercedes SLK, which is mounted vertically into the dash and swivels into a usable horizontal position once it pops out. Again, clever. Again, would break if you tried to fit a 32oz drink into it. They weren’t planning for fat Americans with giant beverages with them at all times.
Don’t even get me started on baby seats and strollers.
Yes, it was more the size of the cupholders that was the real issue, IIRC.
They couldn’t hold a vase of hot coffee / bucket of cold coke ~ with ice cubes.
My standard gag is bragging on how wonderful our ’04 Sienna is, with 13 cupholders. I bet that’ll help its resale value.
We do use ’em for water on trips of any length, not something you can ignore in an area with humidity as low as 10%.
I think if you look at Toyota’s broader strategy in the 1990s, it was clear they were executing a massive product assault designed to take down General Motors in the US domestic market. And the Lexus LS’s product attributes were very much aimed at the heart of the US luxury — V8, quiet, smooth ride, not ridiculous price.
Perhaps Lexus caused a more serious crisis in confidence at Benz, but Lexus has never been much of a real threat in Europe and the rest of the world — unlike the US where it was the leading luxury brand for a number of years.
I agree that Cadillac had already crashed before the arrival of Lexus, so MB was clearly hit hard and their arrogance tempered a bit. As the Stuttgart scramble ensued, the resultant dip in quality and style hurt the brand for many years in my opinion, and they are only just now getting back to the “aura”–at least with the S-Class, that they had in the 1970s.
However, I believe that Lexus very clearly targeted U.S. oriented premium buyers, who were migrating toward the European style but wanted something a bit “softer” and certainly better dealer service. Had Cadillac and Buick, or Lincoln Mercury, figured this out in the 1980s when there was still time, the outcome could have been different.
Today, Lexus strikes me the way I imagine my parents would have thought of Buick back in the day: nice, respectable and utterly boring cars driven by relatively affluent, conservative customers. My parents drove Buicks, by the way, so that perception wasn’t negative, just not at all exciting. Reasonable business, but hardly the breakthrough that Lexus envisioned when they truly shook up the industry back in the early 1990s.
Lexus is following the way of Lincoln, the same way they made luxury cars in the ’80s, maybe also the Mercury. The Grand Marquis from the ’80s looks pretty prestigious but they weren’t cheap. However Lincoln made the aero mistake in the ’90s and lost the direction ( lured by profitable SUV also, thus all sedans and coupes were neglected ) and Mercury scaled down to Ford. Buick is rather successful with Century/Regal, LeSabre/Park Avenue but by 2005 they were too associated with white wall tires already. ( I once parked my ’95 LeSabre outside an insurance company and one manager was asking when did his mom come. )
They have fallen into a “conservative and predictable” trap which is why they’re pushing the F-sport models so hard right now. Trying to re-establish the credentials as makers of truly desirable cars that they had back in the 90’s (early LS400, SC300/400, the first GS300 was beautiful even if the didn’t get the turbo version that Japan did in the Aristo). That and the new sports coupe, which I know very little about (its existence took me by surprise) which is a foray into a market that had may be showing signs of revival?
As others have stated, Cadillac was already dealing with its own issues before Lexus’ arrival. That being said, I think Lexus had huge appeal for the younger professional (late ’20s to early ’40s) who a decade earlier would have otherwise aspired to a Cadillac. Cadillac’s image had already been suffering as Mercedes, BMWs, and other European cars were becoming more common sights on American roads, but Lexus was like the new young girlfriend showing up to a party where the ex-wife was also attending. It made Cadillac look stuffier and unappealing as ever (once again to most younger people), and Cadillac largely carried the “old man’s car” image for the next 15 years.
Now as you stated, Mercedes responded by cutting quality in order to cut prices. This was a move that I believe initially hurt Mercedes quite a bit. Benzes of the mid-’90s through early-’00s were pitiful in some respects to those of the ’80s. While its quality image may have suffered, Mercedes’ image of prestige and aspiration never really diminished though. Quality has improved in the past decade, and for better or worse, de-contenting and ever smaller models keep the threshold to enter low.
I should also add that it’s incredible how Lexus was immediately able to craft an image of prestige, out-snobbing just about every brand except Mercedes and BMW. Quite remarkable.
One of the brilliant things Lexus did was it’s lengthy preview campaign, which, in contrast to Infiniti’s zen rocks and moss, gave a detailed look at the precision of the car’s components, long before we actually saw the car.
Combined with the Japanese automakers – and especially Toyota’s – reputation for quality and value, it was a pretty good platform to launch a luxury brand.
The fact that the initial LS400 sold against the W140 S-Class, arguably the least attractive and most ponderous member of that class, didn’t hurt, either.
Hurt Mercedes more. I can’t imagine many potential Cadillac buyers cross-shopping Lexus. The 400 seemed out of Cadillac shoppers’ price range, particularly considering the usual GM haggling on price.
But Mercedes’ shoppers would definitely be interested in the Toyota-level quality and the Lexus purchase ‘experience’ sounds like something far and above something even Mercedes owners could expect.
I tend to agree with you. I also suspect there isn’t much Mercedes/Lexus cross-shopping with Cadillac even today, despite the first two marques’ slipping quality – compared to early 90s levels – and Cadillac’s (arguable) progress in same. Perception kills Caddy every time.
I was there for the debut of the LS 400 in a way. I was a ‘gonna-be’ executive in the late 80’s and driving an Acura Integra. My wife, who is Japanese, was working a personal interpreter/translator for the Japanese President of a company which had moved its manufacturing to the U.S. for cost reasons. He bought a Cheverolet Caprice (although he could have afforded anything) for his personal car. in Japan, Cadillac had a reputation as an ostentatious car for gangsters …and at the same time… a poor quality reputation. Mercedes was out for his personal car because he felt that it would have made him appear too wealthy – bad for financial negotiations. He considered a Mercedes for his wife, but after the salesman was rude to my wife (interpreting), she got a 328i.
To finally cut to the chase, as the American in the mix, that damn Chevy -repeatedly- embarassed me. A very top of the line Caprice, it was sloppily assembled in places where it showed. A wheel bearing failed at just over 12,000 miles and the dealer gave us (me, really) a hard time, finally faking the mileage to get GM to cover it. Left a bad taste. Then, it would never start in cold weather. He put up with it for two years, and then th LS400 appeared on the market.
It was a revelation. The car was fast, silent, spacious, assembled like a watch. The dealership did everything but shower us with flower petals. The automotive universe had changed.
I personally feel that M-B jumped the shark with its W140 platform. The flaky electric assist steering, the wiring made with biodegradable insulation ( an epic disaster ), and general decline in overall build quality. The Lexus LS offered both unbeaten long-term reliability and superior resale value. Lexus’ customer service is also ahead of Mercedes by a country mile. My own 1995 LS400 has 123,000 miles and still purrs like a happy kitten.
Speaking of Mercedes. Earlier this month I scored a complete, running, rust-free 1990 300SEL for- get this- $475. It was a tow yard lien sale. That’s why it was so cheap. The previous owners were apparently a down-on-their-luck couple from the 29 Palms area who abandoned it in an Orange County shopping center parking lot. The tow yard tried for a month to reach the owners and they never responded. The tow company then placed a lien on it to cover their towing and storage costs. That’s where I came in.
It has a horrendous dent in the right rear door but is otherwise completely straight. Other than the dead power antenna and lukewarm air conditioner, everything works. I plan to fix the body damage and either make this car a quick flip or a future replacement for my Lexus.
Here it is:
$475? Running and rust-free? Wow. With the dent fixed and a good cleaning you could probably sell that for $3000 or more, depending on mileage. That’s a steal.
It’s also an interesting illustration of the very question here. ’95 LS400 or ’90 300SEL? The LS would be be better in cost per mile. The Benz has more presence and more of a “classic” vibe to it. I haven’t driven an example of either to be able to offer an opinion there…
Good point about cost per mile. The Mercedes has 365,000 miles on it whule the Lexus has 123,000. Neither one burns any oil nor makes any funny noises. Both have good power and don’t leak.
The 4.0 liter Lexus V8 and 3.0 liter Mercedes I6 get about the same mileage. The Lexus DOES have a significant horsepower advantage, however.
As far as repairs, the Mercedes has a few distinct advantages:
Only one head gasket to potentially blow, rather than two.
You don’t have to pull the intake to replace the starter.
No rubber timing belt to break.
The LS400 actually hurt Lexus more than Cadillac or Mercedes. The original LS400 was a remarkable automobile. Despite the strength of this model, Toyota (Lexus) took badge engineering short cuts with the rest of the lineup (ES250 Camry Brougham). The standard set by the original LS400 sadly was not to be repeated. Today Lexus is known as an “old farts” car that gets recalled often.
Lexus ES is nearly identical to a V6 Lincoln Continental without air suspension, exactly catching the same buyers 30yrs ago.
Lexus ES is nearly identical to a Continental without air suspension, except for the notable reliability/longevity difference between a Camry and a Taurus!
Essex V6 and AOD both takes big blame for that.
But on the other hand, Taurus/Continental, Camry/ES are all rust-prone, and 4 different plastic ( chrome over metal for Essex V6 Continental ) rocker panel has a big tendency to disappear after the metal inside was eaten away by road salt. Mainstream sedan doesn’t equal to rust-prone, but maybe apart from Caprice no other cars escaped from that ( including Crown Vic! sigh* )
“Old farts” cars or not they sure sell a lot of them. And they’ve captured the attention of a broad range of the age spectrum, especially with women. My wife, S-I-L and M-I-L all want/have RXs. The age range is 38-73. That’s pretty remarkable.
If Audi ever gets their reliability reputation near Lexus’, Lexus needs to watch their back…
Lexus – what Cadillac should have been?
Absolutely.
Mercedes. It was their buyers (and 7 Series, Audi, and to some extent Jag buyers) that would go for this.
Yes, Cadillac (and Lincoln, and Chrysler) had mostly lost those people. But that process was already well, well underway by that time.
This car affected everyone under 50 and no one over 50 at the time. The overs kept on buying Cadillacs, Lincolns, and Chrysler New Yorkers. The unders had a cheaper and just as reliable alternative to the Germans. It affected them.
I would say that Mercedes was hurt more by Lexus. Mercedes, Audi, and BMW had already put a hurting on Cadillac throughout the late 70s and 80s. Also, Germany was undergoing a recession around the time of Lexus’s introduction, which made their cars more expensive. Therefore, Lexus introduced its LS400 at the perfect time. It was just more car for the money.
I remember taking a body shop frame repair course around this time. They were talking about frame tolerances and I remember them saying that the tolerance for American cars is 5 millimeters, German and Japanese cars 3 millimeters, and the new Lexus 1 millimeter. Yes, they were a game changer.
As others have pointed out the domestic luxury cars were already in decline by the time the Lexus arrived in our shores. The damage was already done if anything Lexus inspired Cadillac to improve. The big looser was Nissan/Infiniti with the Q45. The automotive press was all praises for the Q45 driving dynamics and quality. The LS400 also received high praise but criticized as being too bland. Toyota gave the American buyer what they wanted at the right time; A high quality, reliable, comfy car, luxury car. The car that the domestic manufacturers should have been building.
I think this topic is worth of a series, the impact of the LS430 and the LS460 on the luxury car market. A very interesting premise and great comments. Very enjoyable!
I think Cadillac and Mercedes were both hurt, but not to the degree people think. Mercedes had to tighten its game up, but still generally held on to its reputation. By the time Lexus arrived, the damage to Cadillac was well and truly done and the first steps to repair it were underway.
The real losers to me were the upper end of the mid range brands. Oldsmobile, Buick, Saab, Volvo, even to a lesser extent Audi. These brands all got knocked around badly. Audi has managed to develop successful high end cars and the reputation to go with it after the disaster in the 80s, but was probably slowed down by Lexus.
Volvo managed to hold onto its market, but its ambitions of moving upmarket were probably scuppered by Lexus.
Saab had multiple issues that killed it in the end, but seriously, how many people would really prefer a 9000/9-5 over a LS400?
Olds and Buick? Dead as soon as the ES arrived, their corpses just twitched on for a while. Zombie Buick, an Opel in everything but name…
Glenn.H – I’m not sure too many SAAB folks would have looked at Lexus to begin with. Acura and Infiniti perhaps.
Personally, Subaru and to a degree the Prius made Saab and Volvo irrelevant. The people who would have traditionally bought Volvo wagons since they would never be caught dead driving a SUV or a Toyota Sienna/Honda Odyssey/the Chrysler minivans are now buying Foresters and Outbacks. And the people who bought Saabs? They’ve converted to the Prius, they’re every bit as quirky as a Trollhattan built Saab – ironically the 9-2X is a WRX.
The original Lexus LS400 may have hurt Mercedes more, but it was the final nail in the coffin for Cadillac.
GM had already killed Cadillac. But Lexus took the space where Cadillac should have been.
The LS400 was, and the LS series remains, the ultimate “Cadillac”–a big, comfortable, serene car.
Cadillac trying to reposition itself as a BMW/Benz alternative hasn’t worked very well–even though the current ATS/CTS are more BMW than BMW.
Cadillac, like America, should have been the ultimate expression of spacious, serene luxury and opulence. Let the Germans build the autobahn screamers that will never see, in the USA, the triple-digit speeds they excel at.
That space was taken over by Lexus.
Definitely Mercedes! I wouldn’t buy a new Mercedes for anything. GM destroyed Cadillac with no help from anyone.
Not that Cadillac ever sold in numbers in Australia, I think by the mid-80s the gray imports (rhd converted and compliance by a private company in Australia) were basically nonexistent.
I dug up a magazine comparison from mid 1990 putting the $120k Lexus against the $108k BMW 535i & $148k 735iL, $131k Jaguar Sovereign, $62k Holden Caprice and $137k Mercedes 300E-24 & $180k 420SE. The BMWs and 300E were preferred over the Lexus which was softer and less precise but very comfortable and quieter. It was also faster than all of the cars except the 5.0 V8 Holden which was 32hp down on the Lexus but 300lb lighter. The 420SE and Jag were outdated.
The thing I remember about Lexus’ impact on Mercedes is they used to develop the car (how many rear suspension types did they try for the 190E again?) and then work out what it cost knowing their customers would pay, but after Lexus they set the selling price and made sure they came within that. A complete change of mindset and obviously they struggled with that initially. The W140 (which predated this era) was developed in the booming 1980s and launched in the 1990s recession, and was the wrong product for the time.
It definitely hurt Acura, as the first luxury nameplate from Japan.
I thought BMW’s were the be-all and end-all of superior German workmanship. Then I rode in my cousin Greg’s 3-series and the rubber molding on the door fell out when I opened it, the stereo refused to work and there was a rattle that my cousin said the mechanic still couldn’t figure out after numerous trips to the dealership. I think it’s all perceived quality and the workmanship is not as solid as they’d have you believe. Maybe Hyundai and Kia are on to something with their ballsy entrants into the luxury car waters.
The comments here say a lot about the effectiveness of public relations/advertizing. Drive any of these cars back to back and you’ll quickly realize they’re different rather than better/worse than one another. The quality arguments seem spurious, you’re not seeing dissimilar amounts of surviving cars still in circulation. The entire discussion originates in branding hubris the consumer was manipulated into propagating and has little to no reality to it. The sales figures (1980-2010) also clarify the situation.