Is The Lexus Strategy Starting to Backfire?


Edmunds recently came out with some revealing data that Lexus market is down substantially since 2010 where it peaked at 18.2%. It currently sits at an ok 13%. However, the number of luxury brands hasn’t substantially changed. So what’s the problem? Well there are quite a few.

The biggest issue is its aging lineup. In the shrinking but still lucrative compact and midsize sport sedan segments, Lexus has some of the oldest models for sale today. The engines are slow and unresponsive, the sedans are too heavy, and the technology is ancient. Lexus is no longer really priced as the better value either. The GS sedan does not even have Apple CarPlay. Another model that has outstayed its welcome is the RC coupe for the same reasons.

Further, the bigger SUVs the LX and GX haven’t been updated in 10+ years. In the very hotly contested midsize and full size segments, this is embarrassing. BMW cut short the previous X5’s model life to fast track the new one. Lexus is losing sales for not truly competing in these segments. Not only do they sell in large numbers, they’re extremely profitable.

Their crossovers are faring slightly better, but are not showing the growth of other brands. Maybe the styling isn’t resonating with typical Lexus buyers. If a buyer gets into the BMW brand at the X1 level, they can later move up to the X3, X5, then X7 should their lifestyle and budgets allow. Alternatively they could move to the X2, X4, or X6 should they want something with more style. Lexus has no such path.

Lexus likes to use tried and true methods for car lifespan and development. That’s why they are so reliable. The V6 in every Lexus dates back many years. The infotainment has been strongly criticized for years with no changes. Lexus simply moves too slow. Further, while many shoppers appreciate reliability, most Luxury shoppers simply lease for a few years and move on to a new model after. Leasing a Lexus in 2017 is pretty much the exact same lineup as 2020. Why would luxury buyers want to lease the same exact car? They don’t.

This “slowness” has affected their ability to get more models for sale. BMW and Mercedes have about 7 SUVs EACH, while Lexus has 4, maybe 5 depending on how you count the UX. The same ratio applies to coupes and sedans. The same applies to every aspect of Lexus vehicle development, especially technology where these buyers expect more. The luxury market has changed and Lexus refuses to grow with the market.

Let’s see if Toyota can right the ship and fix all these issues soon.

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