From Question Mark to Benchmark - Lexus Celebrates its Tenth Anniversary
23 July 1999
From Question Mark to Benchmark - Lexus Celebrates its Tenth Anniversary TORRANCE, Calif., July 22 -- Ten years ago this month Lexus
was revving its engine and preparing to enter the U.S. luxury car race. The
big question was whether the new division of Toyota Motor Sales, U.S.A., could
compete against established German and American luxury marques. Now, 10 years
later, Lexus is leading the race. For the first half of 1999, Lexus is the
No. 1-selling luxury make in the United States, outselling Mercedes-Benz, BMW,
Lincoln, Cadillac and all other luxury competitors.
"I don't think anyone's crystal ball could have predicted the success
Lexus has experienced," said Lexus Group Vice President and General Manager
Bryan Bergsteinsson. "At the outset of our division, we established two
primary goals -- offer the best products in the world and exceed customers'
expectations. We've stuck by that philosophy and in the process we've
exceeded everyone's expectations, including our own."
Lexus' debut came with the LS 400 premium luxury sedan and the ES 250
affordable luxury sedan. From the moment it entered the market, the LS 400
was hailed as one of the finest automobiles ever made. By offering an
outstanding vehicle at a competitive price, coupled with superb customer
service, Lexus quickly carved a niche for itself and, in 1993, became the
No. 1 luxury import brand.
But the German manufacturers responded quickly. They came back with new
and improved products at lower prices. Models previously equipped only with
six-cylinder engines now offered V8s to compete against Lexus. Providing
high-quality cars and top-notch customer service became the price of entry in
the luxury market.
Just as the German makes were rebounding, Lexus also encountered
challenges on other fronts -- the U.S. government and the Japanese economy.
In 1995 Lexus was faced with the double hit of threatened 100 percent trade
tariffs and an escalating yen. The proposed tariffs were waived after intense
U.S./Japan negotiations resulted in an automotive trade accord. But no
negotiations could ease the sting of a rising yen, which forced Lexus to raise
prices at a critical time.
Despite these challenges, Lexus weathered the storm and used the
opportunity to re-engineer and re-introduce new models with more equipment.
At the same time, the strengthening dollar allowed Lexus to lower prices and
re-establish a value position.
Through its first eight years, Lexus introduced four more new products:
the ES 300 affordable luxury sedan and the SC 400/300 sport coupes in 1991;
the GS 300 mid-level sports sedan in 1993; and the LX 450 in 1996. By the
mid-90s, Lexus had become a household name and earned the reputation of
selling bulletproof cars at a value price and setting new standards of
customer satisfaction. In spite of this success, some critics said Lexus was
boring.
"We didn't think we were boring. Our customers didn't think we were
boring, but there was a perception of our cars not being exciting enough,"
said Bergsteinsson. "With the launch of the new GS 400 and 300 sedans we set
out to change that image."
The 1998 GS 400 offered sleek styling and a 300-horsepower, 4.0 liter V8
engine that blasted from 0-60 in less than 6 seconds. To position this high
performance sports sedan, and, at the same time expand on the Lexus brand, a
new marketing approach was introduced with the "Something Wicked This Way
Comes" ads. This campaign evolved into "The Relentless Pursuit of
Exhilaration" theme. It was the first time Lexus had deviated from its
traditional "The Relentless Pursuit of Perfection" tag line and showed Lexus
was branching out.
Not only was Lexus presenting a different marketing image, but over the
next year, it extended its product line, as well. For the 1999 model year,
Lexus became the first luxury brand to offer two distinct sport utility
vehicles (SUVs). The LX 470 premium SUV provided the ultimate combination of
outstanding off-road capability with top-of-the-line luxury appointments.
Lexus also debuted the RX 300, a car-based SUV, which offered the commanding
ride height and off-road functionality of an SUV without sacrificing the
smooth ride, handling and conveniences of a luxury car. The RX 300 has become
a runaway success, establishing an all-new segment in the market. The RX 300
is Lexus' volume leader, a fact noticed by competitors. Soon, other car-based
luxury SUVs will be vying for the same buyers.
Lexus' product line-up is continuing to grow. Next on Lexus' agenda is the
IS, a European sports sedan targeted at younger buyers, scheduled to debut in
mid-2000.
"A decade ago Lexus offered two cars and sold 63,000 vehicles in our first
full year," said Bergsteinsson. "Now we offer six models of cars and SUVs,
and are on target for a record year of selling more than 170,000 vehicles.
The next ten years are sure to be full of surprises and challenges, but my
expectations for Lexus are high. I'm confident Lexus will continue to raise
the bar for quality and customer satisfaction. If we do that, sales will
follow."
