To no one's surprise this has been a very tough year for automakers. General Motors and Chrysler have both filed for bankruptcy and now even legendary icon Toyota is bleeding massive amounts of cash. This is troubling skittish investors so much that Bllomberg is reporting they are now looking over the automaker with a fine tooth comb and are focusing their efforts on the luxury unit Lexus.
Lexus until very recently was the defacto way to run a luxury unit. Clean straight forward, conservative designs, marketed to the masses at an optimum price point. If you were looking for a fine upscale sedan and price was more of a factor than innovation, Lexus was your sweet spot. Much of America seemed to agree to the philosophy of 80% of the technology, 60% of the price. Lexus soon flourished with impressive double digit increases drawing not only from upwardly mobile Toyota customers but from established luxury brands as well.
All of this sets the stage for a fantastic fairy tale ending if it wasn’t for the last few months. Somewhere along the way when the economy tanked the proverbial wheels on the apple cart fell off.
Lexus ended a rough 2008 down 21.7% on the year compared to 2007. With tight credit and an uncertain job market the luxury unit was hurting just like anyone else. However at the beginning of 2009 when many makers declines where starting to level off, Lexus sales began to nose dive.
So much so that in May, the year to date sales percentages for Lexus had dropped 37.16% against 2008. They also were now at the bottom of the pack, with only Infiniti edging lower posting a 40% decline on the year.
% Gain for 2009 |
| 2008 | 2009 | % |
Audi | 30321 | 36820 | -17.65% |
Mercedes | 69933 | 99703 | -29.86% |
BMW | 76819 | 110569 | -30.52% |
Acura | 42802 | 65458 | -34.61% |
Lexus | 73186 | 116458 | -37.16% |
Infiniti | 32144 | 53565 | -39.99% |
To make matters even worse Lexus had now taken a comfortable lead in the number one position in 2008, and lost it to rival BMW. Even more insulting maybe at the current rate of decline Mercedes Benz may out pace them in the next quarter as well.
So far on the year BMW now leads Lexus by over 3,600 and is slowly stretching the lead each and every month. At the same point last year Lexus had a lead of over 5,800 units on BMW.
Sales for 2009 |
| 2008 | 2009 | Units |
Q1 | 66510 | 58365 | 8145 |
Q2 | 70196 | 73148 | -2952 |
Q3 | 67548 | 64120 | 3428 |
Q4 | 55868 | 53480 | 2388 |
2008 | 260122 | 249113 | 11009 |
| | | |
Q1 | 42069 | 42731 | -662 |
Q2 So Far | 31117 | 34088 | -2971 |
2009 | 73186 | 76819 | -3633 |
Where did it all go wrong?
Was it the credit market? I would like to think the Lexus buyers in general weren’t over leveraged.
Is it a lineup that succeeded each year in spite of minimal changes? After all can you tell at a glance a 2006 RX vs. a 2009?
It is that consumers are simply more cautious and now want on luxury brands that deliver on all fronts?
If you were leading Lexus how would you steer them back into forefront of the industry?