THE AUTOEXTREMIST

April 27, 2011

Lexus has trouble with a capital “T.”

By Peter M. De Lorenzo

(Posted 4/25, 11:00 a.m.) Detroit. One interesting thing to come out of the New York Auto Show media days last week is that Lexus is officially using the tragic circumstances surrounding the disastrous earthquake in Japan as an explanation as to why the brand will lose serious ground in the U.S. market this year, ending a ten-year run for Lexus as the leading luxury brand here.

Mark Templin, general manager of the Lexus division, told Mark Rechtin of Automotive News that upcoming inventory shortages will basically end the Lexus run of success here. Not to make light of the awful scenario that has crippled Japan, but the reality of the situation is that Lexus was well on its way to losing its mojo long before the earthquake. (For the record, Mercedes-Benz was only 5,000 units behind Lexus in the U.S. at the end of last year.)

Back when Lexus established its beachhead in this market they had something that no one else was offering in the luxury automotive space, and that was an intense focus on taking care of the customer to a degree that no one had even conceived of, let alone attempted before. And it worked exceedingly well.

Combine that with vehicles that emphasized quiet and comfort over dynamic substance, and it was a recipe for considerable long-term success. But that was then and this is now, and Lexus embarked on a path that was going to have them arrive at this point in time, whether or not there were disruptions in their ability to make vehicles due to the earthquake or not.

The Lexus mission of intense focus on the customer was laudable and it changed this industry. But in the process of doing that – and only that – Lexus executives lost sight of two crucial truths about this business:

1. Focus on the process should never supersede focus on the product, because it will bite you in the ass in no uncertain terms down the road.

And 2. This business stopped going through the motions long ago and it’s now a seething cauldron of 24/7 change with new players and new products emerging with the stated mission of taking your piece of the pie away. And any auto manufacturer who rests on its laurels or forgets these two key points will find itself standing like a house by the side of the road scratching their collective heads and wondering what the hell happened.

The new world order has caught and passed Lexus – and Toyota, for that matter – and it’s killing them. Too staid in their thinking, too conservative in their assessment of their competition, and too focused on what got them to this point instead of on where they need to go in the future, especially given the competitive set in the market, and you have a recipe for disaster.

How tone-deaf is Lexus and its executives? When Lexus first came into this market they undercut their German competitors by $15,000, losing money on every car while doing so, all in the interest of gaining a foothold in this market. And it worked beautifully.

But fast forward to today and here’s Hyundai undercutting Lexus by $15,000 in this market with its Equus luxury sedan, which is, for all intents and purposes, a Lexus clone and a damn good one too. Maybe even better. And Lexus really has no answer for it other than to say something like “we’ve always been here, our dealers are great, our customers are happy and we will prevail.” Uh-huh.

But that’s not all, because the German manufacturers are reinvigorated and getting very aggressive in this market, attacking myriad segments with vehicles bristling with a distinct point of view and a real driving difference from the Lexus pillow-mobiles.

And even the two American manufacturers - GM and Ford (I no longer consider Chrysler to be an American car company by any stretch of the imagination, no matter how hard Olivier Francois tries to connect the company to the Motor City in its ads) - are going after the luxury segment with a shockingly aggressive product plan including a flurry of new Cadillacs on the way and a totally reinvented Lincoln brand about to come on line.

The fact of the matter is that this business has changed fundamentally and unequivocally. And it’s not just the emergence of the Chinese market that’s driving it either. It’s about automobile companies going after market share wherever they see an opportunity, and when you’re Lexus and you’ve been operating in the quaintly old-school mode of “we’ve always done it this way and it has worked out pretty well” – a regimen patented by “old” Detroit and which propelled its rapid decent into bankruptcy, by the way – then you’ve got trouble with a capital “T.”

More evidence that Lexus doesn’t have a clue as to how deep their looming problems are going to get?

Lexus operatives are busy trying to redefine the brand’s design language, the “face” of the cars that you see coming at you while you’re out driving on the road. Mercedes has its distinctive grill and three-pointed star. BMW has its obligatory twin grill openings. Cadillac has its new corporate face well-established now. And Audi’s imposing presence on the road is ratcheted-up with each new offering, etc. Every manufacturer tries to establish a recognizable “face” on the road for all of its products, in hoping to sear their particular brand imagery in consumers’ minds.

With all of this in mind then how do you explain what happened in New York? Lexus unveiled its new “face” (below) on its LF-Gh concept to the waiting media and it went over with a loud O-M-G thud.

(Toyota)

A rational explanation suggests that Lexus global design honcho Simon Humphries clearly wanted the new Lexus “face” (the concept is something like 95 percent accurate to the coming production model) to take on a more aggressive presence on the road. Uh, that’s obvious, but are traditionally docile Lexus owners going to want to go out in public with the equivalent of a bad Halloween mask on every time they get behind the wheel? I think not.

This is design run amuck, pure and simple, but it’s more than that. It’s emblematic of just how out of touch Lexus is, and just how desperate they are to fix what ails them. But the real problem here is that in order for Lexus to fix what ails them it would help to have a real feel for what’s wrong to begin with, and it’s clear to me that they don’t have a frickin’ clue.

Too bad.

And here all this time Lexus thought they had it figured out and that they were somehow special and different.

No, not really and not so much.

Lexus is now just another car company that has lost its way in this swirling maelstrom of chaos that defines the car market that exists today.

And to make matters worse, their product “plan” apparently consists of throwing everything and anything up against the wall to see what will stick.

Not Good.

And that’s the High-Octane Truth for this week.

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