Desperately Seeking Status

Automotive Industries, Sept, 2001 by Ken Gross

The Lexus brand still lacks clear differentiation and strong aspirational attributes. It must stop refining and start defining -- and take more chances.

Back when Dr. Wolfgang Reitzle ran BMW product development, I asked him if he relied on focus groups or opinion research. He arched his eyebrows and replied, "At BMW, we might ask people if they like a certain color or leather type, but that's all. We know what a BMW is," he declared. "We don't have to ask our customers."

That's not the case with the leading Japanese luxury import Despite selling one million units since 1989 and 110,000 cars and trucks here in the first half of 2001, Lexus has begun a detailed image study. Marketing VP Mike Well wants "to figure out Lexus' DNA." He admits the brand is ill-defined in consumers' minds and wants to get at the core of what Lexus customers like best, in everything from products and image to dealership and service experience.

How can Lexus sell so many vehicles and not know these things? "We may think we know," Wells replies. "But we want to make sure what they (customers) know and think about us."

I'm not surprised Lexus' image is blurred. With the initial LS400, the brand started as an "affordable" Benz-styled derivative focusing on product smoothness, refinement and utter reliability. Its nurturing dealerships yielded high CSI scores -- and provoked BMW and Mercedes into modifying every aspect of their businesses. The Germans counterattacked in time to reap the unprecedented expansion of the luxury market.

Why isn't Lexus' image more distinct? I think it's because the brand still lacks clear differentiation and compelling aspirational attributes. It's never been shy about copying the Germans, and until the SC430, Lexus took very few styling risks. Also, there's a schizophrenia in how Toyota is trying to make the most of a single nameplate. The IS and ES300s bracket the 3-Series and the C-Class; the GS-series cars aim for sportier (5-Series/A6) drivers; and the ES/LS models challenge Cadillac, Lincoln, Jaguar, and mid-to-high-level Mercedes.

Although it has two distinct SUV choices, Lexus has no station wagons; the new 5-door IS-based sport hatch is a temporary solution, but it's neither fish nor fowl. And it's unlikely Lexus would consider a luxury pickup like Caddy's Escalade EXT or Lincoln's Blackwood. Toyota's flagship marque does what's safe and predictable.

Trying to be all things for all buyers has its limitations. Lexus doesn't possess the brand character of its competitors. There's no glorious history stretching back decades, no racing accomplishments and no 507s, E-Types and Gullwings to celebrate. It lacks performance affiliates like M-Sport and AMG. Lexus cars are very good at everything -- but they're not the ultimate in anything except, perhaps, almost numbing levels of refinement.

To inject more emotion into the brand, Lexus recently changed its "relentless pursuit of perfection" tagline to "passionate pursuit of perfection." But Lexus vehicles don't reflect passion in a performance or style sense. They're not evocative, they're not edgy, and despite styling element upticks on the SC430 and ES300, they remain rather bland. Lexus uses supplier excellence, mainly in audio systems, to help validate its worth.

Lexus Group VP Denny Clements likes to say, "If you want to be No. 1, you have to think like No. 2." Wells explains that the brand is "trying to beat ourselves in all areas." That's not nearly as ambitious as say, BMW's attempt with its newest 7-Series to embrace radically different ideas -- what BMW engineers call "path-breaking" technology.

Let's face it. Lexus is where Cadillac used to be. And everyone else has caught up. To emerge as the object of desire for top-level luxury car and truck buyers, Lexus must stop refining and start defining. It must take more styling chances. And it'll have to set real performance and engineering benchmarks.

Can Lexus do it? I think it's time for Toyota to start scaring the Germans again.

KEN GROSS is an internationally known author and marketing consultant. He has been writing about automobiles and the auto industry for nearly 30 years.