LC 500 Puts New Face on Lexus Europe

THE HAGUE, Netherlands – Lexus claims 45% of the premium hybrid market in Western Europe, but Toyota’s luxury brand knows it has a long way to go before it truly can rival the likes of BMW, Audi and Mercedes-Benz.

In 2015, Lexus sold 652,000 vehicles globally, and only 64,000 of those deliveries occurred here in Western Europe, arguably the most important and diverse luxury market in the world.

Lexus is looking to sell 70,000 cars in the region this year, and central to the strategy is offering hybrids as an alternative to diesels, which remain popular across Europe. Brand executives say 95% of Lexus vehicles sold in Western Europe come equipped with hybrid powertrains.

Hybrids may not be sexy to some car enthusiasts, but Lexus’ latest offering, the LC 500h coupe, is dynamically styled inside and out, while offering an innovative hybrid-electric powertrain with two transmissions (a 4-speed auto and electronic CVT) to ensure sporty performance.

The non-hybrid LC 500, powered by a 467-hp 5.0L V-8, was unveiled last month in Detroit at the North American International Auto Show.

Alain Uyttenhoven, head of Lexus Europe.

European sales targets are reasonably modest for both versions of this limited-purpose car, and brand managers hope it will compete with premium entries from Porsche and BMW when it goes on sale in mid-2017.

Still, the LC 500 and 500h represent an opportunity for Lexus to make inroads in the European luxury market, says Alain Uyttenhoven, head of Lexus Europe.

“It’s the most difficult market for us,” he tells journalists as the LC 500h is unveiled here.

A particular challenge for Lexus is Germany, where much of the autobahn can be traveled without speed limits. “In that environment, a hybrid is not at its best,” Uyttenhoven says. “A hybrid is at its best in suburban and intermittent stop-and-go situations.”

Lexus Europe Positioning LC 500 as GT

From an image standpoint, Uyttenhoven is counting on each version of the LC 500 to draw more serious consideration from buyers of premium sports cars. A halo car with 2-plus-2 seating such as this is good for showroom traffic, although the executive understands the volume expectation must remain modest.

“The market for high-end sports cars is 40,000 per year,” Uyttenhoven says. “If we sell a few hundred in Germany, it’s not enough to say we are making big inroads in terms of share. But yes, in terms of image, it’s a change for Lexus.”

Uyttenhoven breaks down the European market for high-end luxury cars into three groups: mid-engine supercars, coupes such as the Porsche 911 and, finally, gran turismo cars such as the BMW 6-Series with high-performance credentials but still comfortable for long road trips.

“It is more in this third category where we will compete,” Uyttenhoven says of both versions of the LC 500. “We see this car as a GT rather than an extreme sports car. It’s not an LFA (2-seat Lexus supercar) with carbon fiber and so on, but a car you can use every day and enjoy on the long trip.

“With the more extreme sports cars, it’s a bit of a challenge to spend 10 to 15 hours in these cars. We want to deliver performance with a high level of comfort.”

LC 500h’s hybrid-electric powertrain uses two motor generators, electronic CVT and 4-speed auto transmission.

Pricing and fuel-economy ratings will be available next year, closer to launch, but Uyttenhoven vows the LC 500h “is not designed purely around fuel economy.”

With its 3.5L gasoline V-6, a powerful electric motor and a 44.6-kW lithium-ion battery pack, the LC 500h is expected to achieve 0 to 62 mph (100 km/h) times in less than 5 seconds. Total system output is 354 hp.

Hybrids Becoming Cool, Sexy

The LC 500h fits within the emerging class of premium sporty hybrids, such as the BMW i8, Porsche 918 Spyder and the new Acura NSX.

“This car brings the hybrid into the domain of high performance,” Uyttenhoven says. “I was discussing with an engineer…that technically it would be possible to spin the wheels on dry asphalt with this hybrid. It’s strange but technically possible. That’s a big change for us.”

The No.1 market for Lexus in Europe is Russia, where the brand sells about 20,000 vehicles annually, Uyttenhoven says. The U.K. comes in second, with 15,000 units, followed by Spain, France and Italy, each selling about 5,000 vehicles annually. Poland is showing rapid growth, with sales up 50% this year.

Russia is the only market where Lexus offers a diesel engine, a 4.5L V-8 in the fullsize LX SUV. The vehicle is popular there because diesel fuel is inexpensive, and consumers like driving long distances between fill-ups.

Bold interior color scheme distinguishes LC 500h.

Asked if Lexus in Europe is winning customers who have left Audi vehicles because of Volkswagen Group’s diesel emissions cheating scandal, Uyttenhoven says he has not noticed a significant shift in that direction.

But he says the hybrid-heavy Lexus portfolio resonates with a growing number of consumers who are environmentally conscious and in cities such as London and Paris, where vehicle access is being restricted to improve air quality.

“In London and Paris, I would say a big car with a big diesel engine is probably not the solution of the future,” Uyttenhoven says.

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