Lexus Unfazed by LS Decline as S-Class, Tesla Model S Grow

WHISTLER, British Columbia – As Lexus LS sales founder this year under pressure from new entrants, the brand is not sweating the situation.

“We don’t feel it’s a problem with the car,” Brian Smith, vice president-marketing for Lexus in the U.S., tells WardsAuto here during a Lexus NX media event. “Many of the buyers in that segment want what’s new and they’re trying it.”

What’s new is the Mercedes-Benz S-Class, which is getting rave reviews and racking up the growth to show for them. S-Class sales rose 81.8% through May, to 6,381 units.

Sales of the LS, which was all-new in ’07 and last refreshed in ’13, were down in the same period, 19.7% to 2,149 units.

Smith also says the Tesla Model S is wooing buyers in the relatively small but influential Upper Luxury Car segment in the U.S.

“They’re right behind Mercedes in volume,” he says. WardsAuto estimates Model S sales tallied 4,600 units through May, down 6.2% from the same period year-ago.

Smith believes most S-Class sales are to brand loyalists who wait for a new generation of the sedan, but some LS buyers may be trying a Tesla.

“They’ll probably come back,” he says. “I think the question remains to be seen how many people will buy a second Tesla.”

As to whether the S-Class is a game-changer, as some in the auto industry are claiming, Smith believes the elements that make the Mercedes unique are not significant enough to sway LS buyers long-term.

“The things that I notice: the (pillow-like) headrests, the (scent) generator, the (LED interior) lighting, all that stuff is incremental improvements, but they’re certainly not game-changers,” he says, adding every entrant in the segment pretty much is now on even footing in terms of performance and handling and looking for ways to differentiate themselves.

When the refreshed LS debuted in ’13, Lexus executives expected the car’s segment to continue to see further decline, which this year hasn’t proved true.

Thanks to growth from the S-Class, as well as Audi’s A7 and the Porsche Panamera, WardsAuto Upper-Luxury Car sales rose 4.0% through May to 23,818 units.

However, in the LS’ launch year of 1990, Lexus sold 42,980 copies of the car.

Smaller luxury sedans, such as Lexus’ own ES and IS, continue to impact large-sedan sales, as does the growth in CUVs.

Smith believes the CUV trend is more of a result of product-cycle timing than a long-term shift by luxury buyers away from cars.

“As we get around to launching some new sedans, coupes, those kinds of products, it’s going to keep the car segment pretty strong,” he says.

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