Automotive News EuropeST. TROPEZ, France - Toyota plans to strengthen its Lexus luxury brand in Europe by introducing new models and marketing them in new ways.
Toyota executives hope to push sales in Europe from an expected 3,700 in 1997 to 20,000 in 2000. The strategy hinges on a new GS300 sedan that will arrive in January and a new small Lexus designed for Europe that will be introduced in 1999.
The small Lexus was previewed at the Tokyo auto show last month in the form of the NC250 concept car.
The two new cars will represent 90 percent of Lexus sales by 2000, said Alan Marsh, vice chairman of Toyota Motor Europe. The facelifted LS400 that went on sale here this autumn will account for the remaining 10 percent.
Unlike in the USA, Lexus is not sold through dedicated franchises in Europe. But even this could change after 2000.
'The third model will give us that crucial volume,' said Marsh. 'We will have a very balanced range in volume and price.'
Success will depend on expanding in key markets like Germany. Today, the UK accounts for one-third of Lexus sales in Europe. Marsh said that aggressive marketing helped establish the nameplate in the UK.
'We tackled Lexus head-on and approached it as a separate brand,' he said. 'We sold it in a manner that the buyer of that type of car expects.'
Marsh ran Toyota Great Britain in 1991, when LS400 sales began in eight European markets. He pushed for dedicated Lexus sales staff within Toyota dealers and set up a separate Lexus management team inside Toyota GB. Elsewhere in Europe, Lexus models continue to be sold by Toyota sales personnel and managed by local Toyota distributors. But the company is now urging dealers to create a separate sales force and adopt some exclusivity programs used in the USA and UK.
Toyota's quality image in the UK also helped Lexus there.
'In the UK, a potential Lexus buyer really believed that he could buy such a car from Toyota,' said Marsh.
The lack of a strong Toyota image elsewhere in Europe affects Lexus, said Marsh. Toyota plans to address the problem with an image advertising campaign.
Toyota executives in Japan also decided six years ago not to be too aggressive with Lexus in the European home markets of Mercedes-Benz and BMW. Toyota launched its assault in the USA in 1990 with separate dealers, two models, a huge advertising budget and pricing that undercut the luxury competition.
In Europe, Toyota executives decided that a low-key approach with Lexus was politically sensible. Japan signed an import quota agreement with Europe just as Toyota was preparing to launch the brand here in 1991. The atmosphere was hostile toward Japanese imports.
Toyota decided to export only the larger LS400 to Europe and to match the pricing of the competition - the Mercedes-Benz S-class and BMW 7 series. The advertising budget was also small compared with the USA. Marsh said that Toyota executives in Europe also determined that the Lexus range had been designed for the USA.
The GS300 didn't come to Europe until 1993. Only then were Lexus sales expanded from eight to 14 markets.
Sales peaked at 4,000 units in 1995. That same year, 79,334 Lexus cars were sold in the USA, down from a 1992 peak of 92,890.
The 1998 GS300 replacement is still considered more a US car than a European one. But this time, Europeans were more involved in its development.
'Times have changed,' said Marsh. 'Toyota is listening to and talking with Europe extensively.'
The new GS300 is smaller outside but roomier inside than its predecessor - a must in Europe. It has more fuel-efficient engines, an improved suspension and a new five-speed automatic transmission. Interior comfort has been upgraded with improved leather seats, a new climate control system and an optional navigation system - features that all European luxury cars have.
The new GS300 won't go on sale in Europe until January because of demand in the USA and Japan.
Europe hopes to borrow marketing programs and advertising campaigns from the USA, said Marsh.
'We will market Lexus as exclusive, and as the best,' he said.
European sales personnel are already being trained to communicate Lexus brand values of exclusivity, said Marsh. 'Many distributors are considering separate facilities because the GS300 was conceived with the Mercedes E-class clearly in mind.'
Plans also include a new system to track customer satisfaction and expectations.
Toyota wants to raise Lexus residual values across Europe to match higher levels in the UK. Thus, pricing strategy will remain the same. Lexus models will continue to be priced to meet the competition, not significantly lower.
The GS300 will start at £31,200 for the base S version and rise to £34,070 (£51,670)for the SE.