Success of Lexus NX Will Not Yield More Supply

NEW YORK – Brisk early demand in the U.S. for the newly launched Lexus NX small CUV may outstrip supply, but as a global play for the Toyota luxury brand it is unlikely any extra units will make it to American shores anytime soon.

“NX has not only been a very, very popular vehicle here in the U.S. for us, but also popular globally,” Jeff Bracken, group vice president, general manager-Lexus Div., tells WardsAuto at the New York auto show. “There is a lot of global demand for production.”

The sole production site for the NX in Miyata, Japan, effectively supplies 89 markets, and the U.S. has been allotted 40,000 units for 2015. With 9,111 sold through March the NX could zoom past that limit – it competes in the industry’s fastest-growing segment – but the cap is firm, Bracken says.

“It would be inappropriate for me to suggest we could secure more than 40,000 this calendar year,” he says.

There is a silver lining: The popularity of the NX has goosed sales of the slightly larger RX CUV. Bracken says the NX was expected to cannibalize RX sales by about 5%. Instead, it is bringing some customers in the door who end up opting for the RX, a product in the final year of its lifecycle.

“It is icing on the cake for us (and) actually turned out to be a plus in business,” he says of the RX, which so far this year has seen sales rise 4.7% to 22,236. “The NX is playing a more positive role than we thought.”

At the same time, the success of the least-expensive Lexus CUV at $34,480 will not convince brand leadership of breaking below the $30,000 price line with a new entry-level product, a strategy employed recently by its German rivals to grow sales and maintain market share.

“We don’t see a need to go there,” Bracken says. “We would rather invest our research and development into more traditional luxury segments.”

However, Lexus may follow another emerging luxury trend of setting up so-called “mall stores,” or little boutique shops with a handful of vehicles for shoppers to browse without the pressure of a sales environment.

“We’ve done some intensive research and it shows people like the concept,” he says.

Luxury electric-vehicle maker Tesla employs the sales model entirely and BMW is pressing ahead with pop-up stores in California.

Bracken applies one caveat to the idea: “If we decide to go down the salon/studio road, we would only do it with our dealers. No factory stores.”

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