Lexus (レクサス Rekusasu) is the luxury vehicle division of Japanese automaker Toyota Motor Corporation. First introduced in 1989 in the USA, Lexus is now sold globally and has become Japan's largest-selling make of premium cars. The Lexus marque is marketed in over 70 countries and territories worldwide, and has ranked among the ten largest Japanese global brands in market value. Lexus is headquartered in Nagoya, Japan. Operational centers are located in Brussels, Belgium, and Torrance, California, USA.
Lexus originated from a clandestine flagship sedan project, code-named F1, which began in 1983 and culminated in the launch of the original Lexus LS in 1989. Subsequently, the division added sedan, coupé, convertible, and SUV models. In 2005, a hybrid version of the RX crossover debuted, and additional hybrid models later joined the division's lineup. In 2007, Lexus launched its own F marque performance division with the debut of the IS F sport sedan, followed by the LFA supercar in 2009.
From the start of production, Lexus vehicles have been produced in Japan, with manufacturing centered in the Chūbu and Kyūshū regions, and in particular at Toyota's Tahara, Aichi, Chūbu and Miyata, Fukuoka, Kyūshū plants. Assembly of the first Lexus built outside the country, the Ontario, Canada-produced RX 330, began in 2003. Following a corporate reorganization from 2001 to 2005, Lexus also operates its own design,engineering, and manufacturing centers, solely responsible for the division's vehicles.
Since the 2000s, Lexus has increased sales outside its largest market in the USA through an ongoing global expansion. The division inaugurated dealerships in Japan's domestic market in 2005, becoming the first Japanese premium car marque to launch in its country of origin. Further debuts in Southeast Asia, Latin America, Europe, and other export regions have since followed. The division's lineup has also been expanded to reflect regional specifications in model and powertrain configurations.
The Pursuit of Perfection
| |
| Type | Division |
|---|---|
| Industry | Automotive |
| Founded | 1989 |
| Founder(s) | Eiji Toyoda |
| Headquarters | Nagoya, Japan |
| Area served | Worldwide |
| Key people | Kiyotaka Ise (MD) Mark Templin (VP, Global) Vince Socco (VP, Asia Pacific) Andy Pfeiffenberger (VP, EU) Jeffrey Bracken (VP, U.S.) |
| Products | Luxury vehicles |
| Services | Automotive financing |
| Owner(s) | Toyota Motor Corporation |
| Divisions | F marque |
History
1980s: The F1 project
In 1983, Toyota chairman Eiji Toyoda summoned a secret meeting of company executives, to whom he posed the question, “Can we create a luxury vehicle to challenge the world's best?” This question prompted Toyota to embark on a top-secret project, code-named F1 (“Flagship One”). The F1 project, whose finished product was ultimately the Lexus LS 400, aimed to develop a flagship sedan that would expand Toyota’s product line, giving it a foothold in the premium segment and offering both longtime and new customers an upmarket product. The F1 project followed the success of the Toyota Supra sports car and the premium Toyota Cressida models.Both the Supra and Cressida were rear-wheel drive cars with a powerful 7M-GE/7M-GTE inline-six engine. The largest sedan Toyota built at the time was the limited-production, 1960s-vintage Toyota Century, its domestic, hand built, limousine flagship and sole V8-powered model, followed by the inline-six-engined Toyota Crown premium sedan. The Century was conservatively styled for the Japanese market, and along with the Crown not slated for export, despite having undergone a complete restyle in 1982. F1 designers targeted their new sedan at international markets and began development on a new V8 engine.
The opportunity for Japanese manufacturers to export more expensive models had grown in the 1980s due to voluntary export restraints, negotiated by the Japanese government and U.S. trade representatives, restricting mainstream car sales. In 1986, Honda launched its Acura marque in the U.S., influencing Toyota's plans for a luxury division; the initial Acura model was an export version of the Honda Legend, itself launched in Japan in 1985 as a rival to the Toyota Crown, Nissan Cedric/Gloria and Mazda Luce. In 1987,Nissan unveiled its plans for a premium brand, Infiniti, and revised its flagship Nissan President sedan in standard wheelbase form for export as the Infiniti Q45, which it launched in 1990. In 1988, Mazda began selling the Luce as the Mazda 929 in North America, and later began plans to develop an upscale marque, to be called Amati, but its plans did not come to fruition.
Toyota researchers visited the USA in May 1985 to conduct focus groups and market research on luxury consumers. During that time, several F1 designers rented a home in Laguna Beach, California to observe the lifestyles and tastes of American upper classconsumers.[16] Meanwhile, F1 engineering teams conducted prototype testing on locations ranging from the German autobahn to U.S. roads. Toyota’s market research concluded that a separate brand and sales channel were needed to present its new flagship sedan, and plans were made to develop a new network of dealerships in the U.S. market.
Brand development
In 1986, Toyota’s longtime advertising agency Saatchi & Saatchi formed a specialized unit, Team One, to handle marketing for the new premium brand. Image consulting firm Lippincott & Margulies was hired to develop a list of 219 prospective names; Vectre, Verone, Chaparel, Calibre and Alexis were chosen as top candidates. While Alexis quickly became the front runner, concerns were raised that the name applied to people more than cars (being associated with the Alexis Carrington character on the popular 1980s primetime drama Dynasty), and as a result the first letter was removed and the "i" replaced with a "u" to morph the name to Lexus.
The etymology of the Lexus name has been attributed to the combination of the words "luxury" and "elegance," and another theory claims it is an acronym for "luxury exports to the U.S." According to Team One interviews, the brand name has no specific meaning and simply denotes a luxurious and technological image. Just prior to the release of the first vehicles, database service LexisNexis obtained a temporary injunction forbidding the name Lexus from being used as they stated it might cause confusion. The injunction threatened to delay the division's launch and marketing efforts.Upon reflection, a U.S. appeals court lifted the injunction, deciding that there was little likelihood of confusion between the two products.
The original Lexus slogan, developed after Team One representatives visited Lexus designers in Japan and noted an obsessive attention to detail, became "The Relentless Pursuit of Perfection." The Lexus logo was developed by Molly Designs and Hunter Communications. The final design for the Lexus logo featured a stylized “L” within an oval, and according to Toyota, was rendered using a precise mathematical formula. The first teaser ads featuring the Lexus name and logo, designed by Team One, appeared at the Chicago, Los Angeles, and New York auto shows in 1988.
Launch
In 1989, after an extended development process involving 60 designers, 24 engineering teams, 1,400 engineers, 2,300 technicians, 220 support workers, approximately 450 prototypes, and over US$1 billion in costs, the F1 project was completed.[27] The resulting flagship, the Lexus LS 400, had a unique design that shared no major elements with previous Toyota vehicles, with a new 4.0 L V8 gasoline engine and rear-wheel drive.[28][29]The LS 400 debuted in January 1989 at the North American International Auto Show in Detroit,[14] and officially went on sale the following September at a network of 81 new Lexus dealerships across the U.S.[30] The LS 400 was sold along with a smaller sibling, the Toyota Camry-based ES 250.[17] The launch of Lexus was heralded by a multimillion dollar advertising campaign in both television and print media.[31]
At its debut, the LS 400 was widely praised for its quietness, well-appointed and ergonomic interior, engine performance, build quality,aerodynamics, fuel economy, and value,[17][32] although it was criticized by some automobile columnists for derivative styling and a suspension regarded as too compromising of handling for ride comfort.[17][33] The LS 400 debuted at US$38,000 in the U.S. (in some markets, it was priced against mid-size six-cylinder Mercedes-Benz and BMW models)[34] and was rated by Car and Driver magazine as better than both the US$63,000 Mercedes-Benz 420 SEL and the US$55,000 BMW 735i in terms of ride, handling, and performance.[35] The LS 400 also won major motoring awards from publications including Automobile Magazine and Wheels Magazine.[36][37] Despite being an upstart, Lexus established instant customer loyalty and its debut was generally regarded as a major shock to the pedigree luxury marques. BMW's and Mercedes-Benz's U.S. sales figures dropped 29% and 19%, respectively, with BMW executives accusing Lexus of dumping in that market, while 35% of Lexus buyers traded in a Lincoln or Cadillac to make their purchase.[35]
In December 1989, Lexus initiated a voluntary recall of all 8,000 LS 400s sold to date, based upon two customer complaints over defective wiring and an overheated brake light.[35] In a sweeping 20-day operation which replaced the parts on all affected vehicles, Lexus sent technicians to pick up, repair, and return cars to customers free of charge, and also flew in personnel and rented garage space for owners in remote locations.[35] This response was lauded in media publications and helped establish the marque's early reputation for customer service.[38][39]
By 1989's end, 16,392 LS 400 and ES 250 sedans had been sold in the four months following the U.S. launch.[40] Although sales had begun at a slower pace than expected, the final tally matched the division's target of 16,000 units for that year.[41] Following initial models, plans called for the addition of a sports coupe along with a redesigned ES sedan.[42]
1990s: Growth and expansion
In 1990, during its first full year of sales, Lexus sold 63,594 LS 400 and ES 250 sedans in the U.S.,[43] the vast majority being the LS model.[43] That year, Lexus also began limited exports to the United Kingdom, Switzerland, Canada, and Australia.[17][44] In 1991, Lexus launched its first sports coupe, the SC 400, which shared the LS 400’s V8 engine and rear-wheel drive design.[42] This was followed by the second generation ES 300 sedan, which succeeded the ES 250 and became Lexus' top seller.[42] At the conclusion of 1991, Lexus had become the top-selling premium car import in the U.S.,[45][46] with sales reaching a total of 71,206 vehicles.[43] That year, Lexus ranked highest in J.D. Power and Associates' studies on initial vehicle quality, customer satisfaction, and sales satisfaction for the first time.[47] The marque also began increasing U.S. model prices past those of comparable American premium makes, but still below high-end European models;[46] by 1992, the LS 400's base price had risen 18% to nearly US$45,000.[48]
In 1993, Lexus launched the mid-size GS 300 sports sedan, based on the Toyota Aristo using the Toyota "S" platform from the Toyota Crown, which had sold for two years prior in Japan.[42] The GS 300 was priced below the LS 400 in the marque's lineup.[49] That same year, Lexus also became one of the first marques to debut a certified pre-owned program, with the aim of improving trade-in model values.[50] In 1994, the marque introduced the second generation LS 400, a complete redesign of its flagship model.[51] In May 1995, sales were threatened by the U.S. government's proposal of 100% tariffs on upscale Japanese cars in response to the widening U.S.-Japan trade deficit.[52] SUVs were exempt from the proposed sanctions.[53] Normal sales operations resumed by late 1995 when the Japanese auto manufacturers collectively agreed to greater American investments, and the tariffs were not enacted.[52]
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In 1996, Lexus debuted its first sport utility vehicle, the LX 450,[54] followed by the third generation ES 300 sedan. The marque's plans for developing an SUV model had accelerated during the U.S.-Japan tariff discussions of 1995.[53] In 1998, Lexus added the first luxury-branded crossover SUV, the RX 300, and the second generation GS 300 and GS 400 sedans. The RX crossover targeted suburban buyers who desired an upmarket SUV but did not need the LX's off-road capability;[55] it was particularly successful, becoming the marque's top-selling model ahead of the ES 300.[55] The same year, Lexus made its debut in South America's most populous country when it launched sales in Brazil.[56][57] In 1999, Lexus recorded its one-millionth vehicle sold in the U.S. market,[45] and was ranked as the top-selling premium car maker in the U.S. overall.[55]
2000s: Global reorganization
In 2000, Lexus introduced the IS line, a new series of entry-level sport sedans. In 2001, the marque debuted its first convertible, the SC 430, a redesigned ES 300, and the third generation LS 430.[58] The GX 470 mid-size SUV debuted in 2002, followed by the second generation RX 330 in 2003.[59] The following year, Lexus recorded its two-millionth U.S. vehicle sale,[60][61] and debuted the first luxury-branded production hybrid SUV, the RX 400h.[62] This vehicle used a Lexus Hybrid Drive system which combined gasoline and electric motors for increased power, fuel efficiency, and lower emissions relative to gasoline-only equivalents.[63]
In 2005, Lexus completed an organizational separation from parent company Toyota,[64] with dedicated design, engineering, training, and manufacturing centers working exclusively for the division.[65][66] This effort coincided with Lexus' launch in its home market of Japan and an expanded global launch of the brand in major world markets such as China.[66][67] Executives aimed to increase Lexus sales outside of its largest market in the U.S.[66][68] To accompany this expansion, next generation Lexus vehicles were redesigned as "global models" for international release.[69] In the European market, where Lexus had long faced struggling sales owing to low brand recognition, few dedicated dealerships, and 1990s import quotas,[70][71] the marque announced plans to introduce hybrid and diesel powertrains,[72] increase the number of Lexus dealerships, and expand operations in emerging markets such as Russia.[73][74]
Lexus' arrival in the Japanese market in July 2005 marked the first introduction of a Japanese premium car marque in the domestic market.[4] New generation LS, IS, ES, GS and RX models subsequently became available in Japan along with the SC 430, ending domestic sales of Toyota-branded models under the Celsior, Altezza, Windom, Aristo, Harrier and Soarer nameplates, respectively. The Altezza and Aristo were previously exclusive to Japanese Toyota retail sales channels called Toyota Vista Store, the Windom was exclusive to Toyota Corolla Store, the Celsior and Harrier were exclusive to Toyopet Store, and the Soarer was previously available at both Toyota Store and Toyopet Store locations.[75][76] Lexus models sold in Japan featured higher specifications and a price premium (from ¥1-million and up) compared with their discontinued Toyota counterparts.[75]Sales for the first half-year were slower than expected,[77] affected by the contraction of the domestic auto market and price increases,[78] but improved in subsequent months with an expanded lineup.[78][79]
Through the mid-2000s, Lexus experienced sales successes in South Korea and Taiwan, becoming the top-selling import make in both markets in 2005;[80][81] the marque also sold well in the Middle East, where it ranked first or second among rivals in multiple countries,[82] and in Australia, where Lexus reached third in luxury car sales in 2006.[83][84] Division executives in 2006 announced an expansion goal from 68 countries to 76 worldwide by 2010.[85] By the end of the decade, this expansion resulted in official launches in Malaysia and South Africa in 2006,[86][87] Indonesia in 2007,[88] Chile in 2008,[89][90] and the Philippines in 2009.[91]
Hybrids and F models
In 2006, Lexus began sales of the GS 450h, a V6 hybrid performance sedan,[92] and launched the fourth generation flagship LS line, comprising both standard- and long-wheelbase V8 (LS 460 and LS 460 L) and hybrid (LS 600h and LS 600h L) versions.[93] The fifth generation ES 350 also debuted in the same year. The LS 600h L subsequently went on sale as the most expensive sedan ever produced in Japan, with a sticker price of approximately US$125,000.[94] By the end of 2006, Lexus' annual sales had reached 475,000 vehicles worldwide.[95] In January 2007, Lexus announced a new F marque performance division, which would produce racing-inspired versions of its performance models. The first of this line, the IS F, made its debut at the 2007 North American International Auto Show,[96] accompanied by a supercar concept, the LF-A.
In October 2007, Lexus entered the Specialty Equipment Market Association show in the U.S. for the first time with the IS F, and announced its F-Sport performance trim level and factory-sanctioned accessory line.[97]Automotive columnists noted Lexus' increased emphasis on sporty models as an effort to bolster the marque's performance credentials and target rivals from Mercedes-Benz's AMG and BMW's M divisions.[96][98] While previous Lexus models such as the SC 400 and GS 400 had received favorable reactions from sport luxury buyers,[99] other Lexus models had been characterized as favoring comfort over sporty road feel and handling, compared with European rivals.[100] By the end of 2007, Lexus annual worldwide sales had surpassed 500,000 vehicles,[101] and the marque ranked as the top-selling premium import in China for the first time.[102] The largest sales markets in order of size for 2007 were the U.S., Japan, the UK, China, Canada, and Russia.[95][103]
In 2008, amidst the late-2000s recession and a weakened world car market, global sales fell 16% to 435,000,[104][105][106] with declines in markets such as the U.S. and Europe where deliveries fell by 21% and 27.5%, respectively.[107][108] In 2009, the marque launched the HS 250h,[109] a dedicated hybrid sedan for North America and Japan, the RX 450h, the second generation hybrid SUV replacing the earlier RX 400h, and later that year debuted theUS$375,000 production LFA exotic coupe.[110] In late 2009, citing higher sales of hybrid models over their petrol counterparts,[111][112] Lexus announced plans to become a hybrid-only marque in Europe.[113] By the end of the decade, Lexus ranked as the fourth-largest premium car make in the world by volume,[114] and was the number-one-selling premium car marque in the U.S. for ten consecutive years.[106][114][115]
2010s: Recent developments
In 2010, Lexus underwent a gradual sales recovery in North America and Asia as the marque focused on adding hybrids and new model derivatives.Sales in the U.S. held steady despite the 2009–2010 Toyota vehicle recalls, several of which included Lexus models. The ES 350 and certain IS models were affected by a recall for potentially jamming floor mats,while parent company Toyota bore the brunt of negative publicity amid investigations over its series of product recalls and problem rates per-vehicle.The redesigned GX 460 was also voluntarily recalled in April 2010 for a software update, one week after Consumer Reports issued a recommendation not to buy the SUV, citing a possible rollover risk following the slow stability control response to a high-speed emergency turn. Although the publication knew of no reported incidents, the GX 460 received updated stability control software.
In late 2010 and early 2011, Lexus began sales of the CT 200h, a compact four-door hybrid hatchback designed for Europe, in multiple markets. Sales of lower-displacement regional models were also expanded, beginning with the ES 240 in China followed by the RX 270; Japan, Russia, and Taiwan were among markets which received model variants intended for reduced emissions or import taxes. In March 2011, the Tōhoku earthquake and tsunami caused severe disruption to Lexus' Japan-based production lines, hindering the marque's near-term sales prospects. Lexus' U.S. executives stated that due to vehicle shortages amidst close competition from BMW, Mercedes-Benz, and Audi, the marque would not remain the country's top-selling premium car brand.Cumulative sales results for 2011 indicated a 14% sales drop in the U.S. market, along with sales increases of 40% and 27% in Europe and Japan respectively, for a global sales total of 410,000 units. Lexus' streak of eleven consecutive years as the best-selling luxury marque in the U.S. ended that year, with the title going to BMW followed by Mercedes-Benz. For 2011 while 45 percent of Lexus sales in the United States relied upon the RX luxury crossover SUV, rival Mercedes-Benz's best-selling offering was the E-Class mid-luxury sedan which commands considerably higher prices. Subsequently, Toyota chairman Akio Toyoda vowed to restore passion to the marque and further increase its organizational independence, admitting that "...back then we did not regard Lexus as a brand, but as a distribution channel". As a result of Toyoda's organizational changes, Lexus senior managers report directly to the chairman for the first time in the marque's history.
In January 2012, the marque began sales of the fourth generation GS line, including GS 350 and GS 450h variants, as well as a lower-displacement GS 250 model for select markets. In April 2012, the sixth generation ES line, include ES 350 and ES 300h variants, debuted at the New York International Auto Show.
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