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post #1 of 22 Old 08-26-2011, 01:14 PM Thread Starter
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MT- Akio Toyoda, The Man Who Can Save Lexus

http://blogs.motortrend.com/akio-toy...#ixzz1W6wUPMht
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Huh? Save Lexus? Toyota’s luxury brand looks to be doing just fine, thanks very much. Last year, Lexus outsold both Mercedes-Benz and BMW in the U.S. Okay, sales are down 19 percent this year, but that’s partly because of supply disruptions cause by the March 11 earthquake in Japan, and the model changeover on the GS. Lexus is still a very solid number three in the U.S. luxury market behind BMW and Mercedes-Benz, and well ahead of Cadillac, Acura, Audi and the rest. But Lexus is in trouble. And Toyota scion Akio Toyoda knows it.

Outside the U.S. and Japan, Lexus is pretty much a bit player in the luxury sector; a distant also-ran to the German brands that dominate the space with much broader product ranges. Mercedes, BMW and Audi each sold 586,000, 609,000 and 623,000 vehicles in Europe alone last year. Lexus? Just over 17,000. Lexus has no big coupes or convertibles, no small crossovers, no sports cars (apart from the hugely expensive and largely irrelevant LFA), no wagons, and – crucially for Europe – no diesel engines. The IS-F is not a bad sport sedan, but it barely makes a ripple in the luxury-performance segment dominated by squadrons of AMG Benzes and BMW M cars.

And the U.S. sales numbers flatter to deceive: Lexus is overwhelmingly reliant on a single model, the lux-by-numbers RX crossover that retails for between $39,000 and $47,000, and accounts for 45 percent of total sales. To the end of July, Lexus had sold about 13,000 vehicles with a base price of $50,000 or more. By contrast, Mercedes-Benz’s best seller over the same period – accounting for 26 per cent of sales – was the E-class, which retails for between $48,000 and $87,000, and the company sold twice as many vehicles with a base price of more than $50,000 than Lexus.

Toyota shook the luxury car establishment to its core with the launch of the Lexus LS400 in 1989. Unbelievably smooth and silent on the road, with body gaps of millimetric precision, mirror-finish paint, and a perfect interior, the LS 400 caused utter panic in Stuttgart. Mercedes-Benz ordered last-minute revisions to its W140 S-class in an effort to match the LS 400’s refinement. As a result, the W140 arrived late and over budget, and the chief engineer responsible was subsequently fired. The LS 400 – along with Honda’s stunning NSX, which debuted around the same time – signaled the Japanese automakers were truly at the top of their game; that even Europe’s grandest marques had reason to be afraid. The Japanese were the new masters of the automotive universe.

So what went wrong? Well, if I were to sum up the extraordinary interview with Toyota CEO Akio Toyoda immediately after the reveal of the 2013 GS sedan at Pebble Beach, it would come down to this: Basically, Toyota blew it.

“Lexus was born out of a unique situation,” says Toyoda. “A single company giving birth to two brands is unique. We wanted a car to compete with the S-class. However back then we did not regard Lexus as a brand, but as a distribution channel.” And that’s a key insight. It’s why Lexus vehicles were sold for many years in Japan as Toyotas, and why Lexus did not have brand or product champions at a senior level within the Toyota organization in Nagoya.

Many of the Toyota managers who were cycled through Lexus (Japanese companies routinely moved senior managers every few years) were short termers who barely understood the concept of a luxury brand. As a result, Lexus product planning was muddled and inconsistent. Turning the quotidian Camry into the Lexus ES 250 was as bad an idea as it was when GM turned the Chevy Cavalier into the Cadillac Cimarron, but it happened because Toyota planners belatedly realized Lexus dealers needed an entry level car. The Camry’s superior reliability and quality – and the indisputably superb levels of service at the dealership that was the truly clever piece of the Lexus idea – meant Toyota got away with the ES 250. But the ES 250 also further reinforced the notion in Nagoya that Toyota and Lexus cars could basically be one and the same.

“On the one hand we wanted to differentiate Toyota and Lexus, and on the other hand we wanted efficiency,” Toyoda admits. “When we wanted to be the biggest [automaker in the world], the people [in Toyota] who understood perfection to mean expensive increased,” he says, referencing the original tagline for Lexus, ‘The Relentless Pursuit of Perfection’ and sideswiping the old guard in Toyota that wanted to cut costs at all costs. “Others thought that as we pursued perfection, our cars were perfect.” Ouch.

To fix Lexus, Toyoda has created a stand-alone Lexus division within Toyota that is responsible for the design, development and marketing of Lexus vehicles worldwide. Its senior managers all report directly to him, an organizational structure that is unique within Toyota. “Lexus never had a leader,” says Karl Schlicht, general manager of the Lexus Product & Marketing Division, an American who works in Japan as part of the new multi-national Lexus senior management team. “We went to Akio and said ‘we need a leader’. And he said, ‘I will be that leader’.”

Toyoda clearly takes that role seriously. “I am passionate about the future of Lexus, and wanted to be personally involved,” he says. “I want Lexus to be the car the most sophisticated drivers want to drive, and once they’ve driven one they never want to drive anything else.”

Akio Toyoda is perhaps the most candid Japanese CEO I’ve ever met, remarkably so for a man from a culture where saving face is all important. “Toyota once dreamed of wanting to be the biggest [auto] company. But I want to aspire for it to be the best.”As a member of the company’s founding family he clearly has the political horsepower to make significant changes to the way Toyota operates, though the lengthy gestation of the LFA supercar, one of his pet projects, suggests the forces of conservatism within the company were very deeply entrenched.

But though Lexus now has a passionate champion at the very highest level of Toyota, it’s not out of the woods yet. When asked what he thought the Lexus brand should stand for, Toyoda-san’s face clouds, and he pauses before answering: “We need to have a clear message. That’s one thing I have difficulty with – coming up with a clear definition.”


As the 2013 GS shows (pictured at top, above and at right), Lexus cars are becoming more sporty, more “fun to drive” under Toyoda’s watch. But that’s hardly a unique selling proposition in the luxury car sector these days. And you could argue the new GS still falls short of what a Lexus should be. The V-6 engine is not as silky-smooth as a Lexus demands, and the decision retain the six-speed automatic rather than use a state of the art eight-speed is unforgivable cheap-skating. (American product planners said U.S. customers would rather pay for the world’s largest in-dash display screen instead.)

Akio, just go and spend some time in an original LS400. Savor the utter refinement, the astonishing attention to detail, and the refusal to compromise. That’s where the Lexus brand DNA is buried.
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post #2 of 22 Old 08-26-2011, 01:36 PM
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Mr. Toyoda needs to follow through on his promises/statements, and so far with Toyota his follow-through leaves a lot to be desired....IMO....



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post #3 of 22 Old 08-26-2011, 04:35 PM
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Toyoda hit it on the head. Lexus needs a new clear direction. Sure in the U.S. which is was originally meant for is selling but its not a global brand. I know they want to expand but they need a clear direction. Making the cars more enjoyable is a start. The new GS is nice but a little too conservative IMO. Then again BMW's latest 5 is conservative looking and waaay big IMO.

At least he knows what's up at Toyota and is not blinded by pride or his name. He really wants to improve the brand. He doesn't just look at sales numbers like Zythr does He realizes that's part of the equation but you have to have good product, clear strategy and vision.

Looks like Lexus is doing what Ford is gearing up for Lincoln, meaning separate design and R&D. of course it will share components but for the most part stand a lone. The F line up needs to get more serious of course with time earn respect but that goes with the brand as a whole. And of course the Germans have waaaay more heritage than Lexus which is a division of a ho-hum Toyota.

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post #4 of 22 Old 08-26-2011, 06:21 PM
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Originally Posted by TrailDust View Post
Mr. Toyoda needs to follow through on his promises/statements, and so far with Toyota his follow-through leaves a lot to be desired....IMO....


...Yet the cars are still selling and Toyota/Lexus are still making money




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Originally Posted by ECHOKnight2000 View Post
Toyoda hit it on the head. Lexus needs a new clear direction. Sure in the U.S. which is was originally meant for is selling but its not a global brand. I know they want to expand but they need a clear direction. Making the cars more enjoyable is a start. The new GS is nice but a little too conservative IMO. Then again BMW's latest 5 is conservative looking and waaay big IMO.

At least he knows what's up at Toyota and is not blinded by pride or his name. He really wants to improve the brand. He doesn't just look at sales numbers like Zythr does He realizes that's part of the equation but you have to have good product, clear strategy and vision.

Looks like Lexus is doing what Ford is gearing up for Lincoln, meaning separate design and R&D. of course it will share components but for the most part stand a lone. The F line up needs to get more serious of course with time earn respect but that goes with the brand as a whole. And of course the Germans have waaaay more heritage than Lexus which is a division of a ho-hum Toyota.

Lexus for the most part has been a success for Toyota, no need to tinker with it too much, just separate it from Toyota, and it should be fine.
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post #5 of 22 Old 08-26-2011, 07:06 PM
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Originally Posted by zythr View Post
...Yet the cars are still selling and Toyota/Lexus are still making money







Lexus for the most part has been a success for Toyota, no need to tinker with it too much, just separate it from Toyota, and it should be fine.

I agree overall Lexus has been a success to Toyota and the industry as well...but that was then, this is now. Toyota needs a new strategy but be careful of not alienating the core audience or buyers. Just like Toyota, Lexus had more reasons to buy but now that the competition has caught up and has more engaging and interesting cars, Lexus is falling behind and they need to sell themselves to the market in why we should buy a Lexus, namely to new buyers. The competition gap with Toyota and Lexus is thinning out with better competition and more competition.

You gotta put more thought in your responses, you keep using the same cookie cutter "it sells so all is fine" mentality. That's the very mentality that got GM, Toyota as well as others (Honda going down that path) in trouble. Even if the car wasn't really that competitive they just cared cause it "sells." That doesn't tell the whole story my friend. Its tiring, you need to give us more reasons why you think its doing fine than the usual "it sells so its good."

Nothing personal just saying.

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post #6 of 22 Old 08-26-2011, 07:32 PM
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Originally Posted by ECHOKnight2000 View Post
I agree overall Lexus has been a success to Toyota and the industry as well...but that was then, this is now. Toyota needs a new strategy but be careful of not alienating the core audience or buyers. Just like Toyota, Lexus had more reasons to buy but now that the competition has caught up and has more engaging and interesting cars, Lexus is falling behind and they need to sell themselves to the market in why we should buy a Lexus, namely to new buyers. The competition gap with Toyota and Lexus is thinning out with better competition and more competition.

You gotta put more thought in your responses, you keep using the same cookie cutter "it sells so all is fine" mentality. That's the very mentality that got GM, Toyota as well as others (Honda going down that path) in trouble. Even if the car wasn't really that competitive they just cared cause it "sells." That doesn't tell the whole story my friend. Its tiring, you need to give us more reasons why you think its doing fine than the usual "it sells so its good."

Nothing personal just saying.


I like my "it sells so all is fine" Lexus' problem is that they have priced themselves out of the market relative to what they are offering, and save for a few models, (ie LS4 series) most of their lineup is more expensive fancier Toyotas, hence their need to break from Toyota to survive, just like Scion needs to do.
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post #7 of 22 Old 08-26-2011, 07:58 PM Thread Starter
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Originally Posted by zythr View Post
I like my "it sells so all is fine" Lexus' problem is that they have priced themselves out of the market relative to what they are offering, and save for a few models, (ie LS4 series) most of their lineup is more expensive fancier Toyotas, hence their need to break from Toyota to survive, just like Scion needs to do.
Why change the prices? Isn't everything fine?

I think "more expensive fancier Toyotas" would offend most Lexus owners (cue spwolf)
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post #8 of 22 Old 08-26-2011, 08:15 PM
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Why change the prices? Isn't everything fine?

I think "more expensive fancier Toyotas" would offend most Lexus owners (cue spwolf)

Point taken. There really is no compelling reason to buy the Lexus LX570 over the Landcruiser as an example.
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post #9 of 22 Old 08-26-2011, 08:41 PM Thread Starter
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Point taken. There really is no compelling reason to buy the Lexus LX570 over the Landcruiser as an example.

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post #10 of 22 Old 08-26-2011, 08:51 PM
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Europeans also have a superiority complex, it's fine for cheap cars to be from places like Japan and Korea, but they (figuratively) thumb their noses at Lexus, and like their luxury cars to be European.

This stigma adds to the difficulty of trying to increase their sales in Europe. Now I know why Europeans laugh at Lexus, didn't know the numbers were so low compared to the Germans.

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post #11 of 22 Old 08-26-2011, 09:10 PM
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“On the one hand we wanted to differentiate Toyota and Lexus, and on the other hand we wanted efficiency,” Toyoda admits. “When we wanted to be the biggest [automaker in the world], the people [in Toyota] who understood perfection to mean expensive increased,” he says, referencing the original tagline for Lexus, ‘The Relentless Pursuit of Perfection’ and sideswiping the old guard in Toyota that wanted to cut costs at all costs. “Others thought that as we pursued perfection, our cars were perfect.” Ouch.

Akio, just go and spend some time in an original LS400. Savor the utter refinement, the astonishing attention to detail, and the refusal to compromise. That’s where the Lexus brand DNA is buried.


These two lines... a rare and candid view into the highest levels of Toyota, and why it has become what it has.

Before reaching the end of the paragraph, I was going to say, go back to the roots, go back to the pursuit of perfection. It's not just a line, but a philosophy. It's not hard to see where the Japanese has succeeded where others have failed, and that's with the basics, and with technology.

We have BMW being the ultimate driving machine, Mercedes being the benchmark of luxury, and now Hyundai has undercut the Japanese in terms of price. So go back to what the LS was, impeccable, precise, reliable. The car doesn't have to be filled with passion, but it needs character, it can't be a toaster. Beyond that, do what the Japanese are good at, technology. Lexus, (and even more so Scion) has suffered to an extent what the Americans have done, brand dilution. With brand dilution also comes resource dilution. They simply need to focus.

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post #12 of 22 Old 08-26-2011, 11:21 PM
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Originally Posted by zythr View Post
...Yet the cars are still selling and Toyota/Lexus are still making money
Well, there's an old adage about a fool and his money....



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post #13 of 22 Old 08-26-2011, 11:58 PM
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Originally Posted by Akio Toyoda
“Toyota once dreamed of wanting to be the biggest [auto] company. But I want to aspire for it to be the best.”
Toyota will have to take a step back from market share and sheer sales volume to completely realize that goal. At least, in the interim.

They need someone who is willing to leap off the tallest peak in Japan. Someone who doesn't worry about whether his parachute will open or not, but one making things the best of the best. That needs to permeate throughout Toyota otherwise Toyoda-san will just experience resistance to his changing vision.

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post #14 of 22 Old 08-27-2011, 12:04 AM Thread Starter
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Originally Posted by gladis View Post
Europeans also have a superiority complex, it's fine for cheap cars to be from places like Japan and Korea, but they (figuratively) thumb their noses at Lexus, and like their luxury cars to be European.

This stigma adds to the difficulty of trying to increase their sales in Europe. Now I know why Europeans laugh at Lexus, didn't know the numbers were so low compared to the Germans.
Europeans will always be biased to their own brands...which is probably more than the "buy American" crowd here at home; so with that firmly in place, I don't think Lexus will ever sell more vehicles than the Big 2 on their home turf.
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[/B]These two lines... a rare and candid view into the highest levels of Toyota, and why it has become what it has.

Before reaching the end of the paragraph, I was going to say, go back to the roots, go back to the pursuit of perfection. It's not just a line, but a philosophy. It's not hard to see where the Japanese has succeeded where others have failed, and that's with the basics, and with technology.

We have BMW being the ultimate driving machine, Mercedes being the benchmark of luxury, and now Hyundai has undercut the Japanese in terms of price. So go back to what the LS was, impeccable, precise, reliable. The car doesn't have to be filled with passion, but it needs character, it can't be a toaster. Beyond that, do what the Japanese are good at, technology. Lexus, (and even more so Scion) has suffered to an extent what the Americans have done, brand dilution. With brand dilution also comes resource dilution. They simply need to focus.
Akio needs to define who they are again if they want to regain their mojo in the North American market. People here are fickle, which is how Lexus has been very successful, but also how they are in a funk now. So besides refreshes of current models, they should broaden their lineup again with vehicles like a GS coupe, etc., which is what would be needed if they want to seriously compete against the Germans.
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post #15 of 22 Old 08-27-2011, 09:12 AM
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Originally Posted by Jason.MZW20 View Post
Toyota will have to take a step back from market share and sheer sales volume to completely realize that goal. At least, in the interim.

They need someone who is willing to leap off the tallest peak in Japan. Someone who doesn't worry about whether his parachute will open or not, but one making things the best of the best. That needs to permeate throughout Toyota otherwise Toyoda-san will just experience resistance to his changing vision.

Maybe a little late for that. The competition scene is much different then when Toyota was at its peak.
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