Lexus facing stock shortage

Prestige brand struggles with supply of popular NX and RX SUVs ahead of UX launch next year

Lexus has held its ground in a stormy prestige market for 2017, selling barely 227 units fewer than it did the year before. It’s not a great achievement for the prestige brand, but it’s a better result than most of its rivals – barring Mercedes-Benz.

According to Scott Thompson, Chief Executive for Lexus Australia, the problem – in a record market last year – is largely a matter of supply… for Lexus at least. Thompson wouldn’t discuss the competitors, although BMW Australia MD Marc Werner has already gone on record blaming lack of new product for his company’s unfortunate run in 2017.

The Lexus boss, speaking with motoring.com.au during the launch this week of the 2018 Lexus LS sedan, admitted that sales had stagnated, due to lack of stock for the popular SUVs in the range.

“We lost a few sales last year based on stock supply. We are limited in terms of our NX supply and a few RXs that we basically couldn’t get out of Japan, so that was our issue last year,” he said.

“We are slightly behind our number this year, but it’s stock supply again at the moment for us.

“We are generally very happy with where we’re going in the marketplace and how we’re sort of moving forward and our growth projections in terms of where we’re going.

“The NX has been fantastic for us, we’ve got a heavy focus this year in terms of launching some great cars like this [LS] to build our brand and we’ll just focus on our core range and continue to do the job we do.”

While the NX only piled on an extra 82 sales last year, taking the 2017 total to 3390, and the RX slipped back 54 sales to 1858, the Lexus range as a whole encountered lower sales, other than the LX SUV and the LC coupe, which wasn’t actually sold in Australia during 2016.

Sales have picked up during the first quarter of 2018, however, with RC, RX, and the new LS all adding to the aggregate. The LX, which is selling stronger also, is almost certainly benefiting from the introduction of the cheaper, diesel LX 450, a vehicle that was previously blocked from entry to Australia for reasons that were not entirely clear at the time.

The LS sedan is already on sale and Thompson says Lexus is holding orders for the car, but he wouldn’t say how many. And it may be academic anyway, with the new model’s first-year allocation for Australia supply-constrained.

“Initial allocation, we’ve been given 120 to start… So we’ll go from there; in terms of whether we can get more, we’ll take more …

“We are starting to get inquiries now… so again we’re doing some pre-orders now and some conversations now, so we’re getting general enquiries that we’re fielding now from a dealership point of view and working out how we go from there…”

Thompson says that the anticipated sales split for the new LS sedan favours comfort and performance over economy and driving dynamics.

“We’re running at just over 30 per cent… hybrid cars – in terms of our overall mix of Lexus vehicles. So that’s a good mix in terms of hybrid vehicles. The projection here is running about 30 per cent, so 70/30 split.”

It’s even possible that the hybrid LS might sell above expectations, now that it’s priced in line with the conventional mode, which is powered by a twin-turbo V6, rather than the V8 of the previous LS models.

“The reality is there is no price premium [for hybrid] with this car [LS], so you do have a choice. You can make a decision based on petrol performance or the hybrid performance; you can make a distinctive choice.”

Thompson revealed that the company’s forecast of 70/30 sales split for LS 500 and LS 500h sales was based on recent experience with hybrid models throughout the whole range, not just the relativity of LS 600h sales measured against previous LS sales in total.

“I’m only judging 30 per cent based on our overall mix of hybrid sales…” he said.

“If we could sell [more] hybrids, it’s great for the environment and great for the [fuel] economy, so I think it’s a good thing.

As the enthusiast’s choice, the F Sport variants are unlikely to sell more than 30 per cent of total LS sales, but Thompson believes that’s enough to warrant selling it in Australia, along with the possibility it might lower the average age of Lexus buyers.

“We brought a range of cars in so the consumers will make the decision themselves.

“I think this car itself will appeal to the existing LS buyer, but because of the new sporty design they’re going to appeal to a younger buyer as well.”

The Lexus range in Australia is gradually moving in a direction intended to draw in younger buyers and lower the average age across the boards, Thompson says.

“The styling of our new cars, in terms of LC coming in, this car [LS] coming in, the redesigned NX and RX will see our buyer profile changing as the cars are becoming different in style.”

And the small UX SUV (pictured) will further increase the proportion of younger buyers choosing Lexus over the rivals, Thompson believes.

“We’re still in the process of negotiating on engine types and variants and specifications now with Japan,” he said, “but first quarter of next year, [when the UX arrives], that’s going to be a good car for us.

“All the predictions, all the consumer research we’ve done on the car basically is heading in a positive direction…”

So how does Thompson sum up the near future for Lexus in Australia?

“We’re going through a brand shift right now, where we’re talking about becoming a luxury/lifestyle brand. That is the focus for the brand, so we change people‘s perception about the lifestyle that we can offer as the Lexus brand.

“That has been a key focus for us, introducing cars like the LC and the LS, and debuting cars like the LF-1 at the Detroit motor show, I think what that is doing is showing the new direction in terms of a lifestyle offering that we can offer is a brand…

“We are trying to broaden our appeal by talking about the brand in a very different context.”

Prestige-brand sales slump in 2017:
Audi – 22,011 (-2247)
BMW – 23,619 (-4409)
Infiniti – 776 (-31)
Jaguar – 2483 (-525)
Land Rover – 13,112 (-485)
Lexus 8800 – (-227)
Mercedes-Benz – 37,068 (+1122)
Volvo – 4681 (-1197)