Lexus U.S. Chief Says Luxury Sales Crown Not Priority

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Greater L.A. Auto Show

LOS ANGELES – It will be a close finish for Toyota Motor Corp.’s Lexus division and BMW AG’s namesake brand as they vie for the title of the top-selling luxury marque in the U.S. this year.

Lexus, the leader for eight straight years, saw deliveries fall 18.3% to 220,502 vehicles through October, leaving just 4,666 units separating the Japanese auto maker from Germany’s BMW, excluding the Mini brand, according to Ward’s data.

Sales of prestige luxury sedans, such as Lexus LS, suffering more than fullsize-truck segment.

But with BMW’s sales declining 8.5% in October, compared with Lexus’ 37.6% slump, it’s unclear whether Lexus will be able to maintain its crown. But that doesn’t bother the auto maker’s top U.S. executive.

“I haven’t been focused on it,” says Mark Templin, senior vice president and general manager. Being the top-selling U.S. luxury brand “has never been our goal.”

Speaking after Lexus reveals its next-generation RX cross/utility vehicles at the 2008 Los Angeles auto show here, Templin says bragging rights to the top spot were “a nice validation that our customers liked the things we were doing.

“(But) in today’s environment, volume gains come at a price, and we don’t want to pay that price,” he says.

While sales in the luxury-brand segment have declined in the U.S. this year, Lexus has experienced a steeper drop than its other foreign competitors from year-ago, including BMW (-4.8%) and Audi AG (-3.5%).

Templin blames the sharp downturn in the U.S. economy for falling demand in two of Lexus’ strongest segments: luxury SUV (RX, GX and LX) and prestige luxury sedan (LS). Sales of luxury sedans have been impacted more than the fullsize truck segment, he notes.

Additionally, Florida and California, Lexus’ two top new-car sales markets, have been affected heavily by the housing slump.

Still, Templin classifies Lexus’ performance as good, given the dire industry outlook and introduction of only niche products in 2008. He also notes Lexus dealers have been able to maintain their high levels of customer service and profitability.

“They’re positioned properly, and they’re doing very well right now,” Templin says of the dealers.

“We have some dealers that just spent a lot of money on new facilities, and those guys are still writing off startup costs. But, overall, most people are very positive about the future. Even in good times, they would have been writing off those costs anyway.”

Templin says Lexus dealers have not skimped on customer amenities and thinks in the current down economy it is beneficial they continue to offer high levels of service. “It’s just one of our differentiators – a way we can stand out more in a tough market.”

To help stimulate sales and appeal to buyers who might be guarding their pocketbooks, Lexus is offering special luxury-value packages and discounting certain equipment packages for the ES and IS midsize sedans and the current-generation RX CUV.

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