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Lexus under-performs in Japan
By Yoann Besnard on 25 March 2008 | 
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Toyota’s luxury brand, Lexus, is under-performing in its domestic market as a result of poor brand image and high prices.
The Japanese giant launched Lexus in its domestic market three years ago in an attempt to take on European premium carmakers such as Mercedes-Benz and BMW which were meeting a relative big success there.
The company opened 160 all-new showrooms and even sent its staff to best etiquette school in Japan, but demand remains weak. What’s interesting about Lexus in Japan is the wrong approach taken by the company.
The company’s executives might be blamed but the problem encountered by Lexus is more than complex. Sold as a premium brand in the US, the company promotes its Japanese technology to compete with the German clique. Bringing this strategy to Japan is out of the question as Toyota already offers models with similar technologies. Lexus can’t also promote an exotic image when belonging to Toyota as European carmakers can do it in Japan. So, the company decided to promote the Japanese core values which is not what Japanese European car buyers are looking for.
Another reason for failure was the limited lineup of three vehicles: the GS and IS saloons, and the SC convertible. Not only they were sold previously under the Toyota label, but they were also 20% more expensive under the Lexus badge.
One approach Lexus never considered was its American success. Japanese people admires American culture in a way that can be seen as ridiculous sometimes. By selling its American success, Lexus might have appeared as exotic as German competitors without directly fighting with them. However, the poor image of American cars in Japan might have threatened the brand’s future.
Source: Business Week
