German brands win war with Lexus in Japan
It was three years ago when Toyota introduced its Lexus brand in Japan hoping to attract Japanese luxury-car fans. But the hit wasn’t that successful as Lexus brand is to Japanese for their taste. The target customers for this segment prefer foreign brands and for most Japanese car buyers foreign means mostly German.
Still, Lexus had a huge success in the American market starting 19 years ago and has been the top-selling luxury brand since 2000 but arrived in Japan only after 2005. By the time Lexus entered the Japanese market, in 2007, German brands were dominating the market so the sales for Lexus were disappointing. Only 34,800 cars were sold in Japan during the whole year while in the U.S. this represented the sales only for December.
One of the biggest problem was the initial lineup of company which started with just three models: the $52,000GS sports Sedan, the $68,000 SC convertible and the entry-level IS Sedan, all three being valued for 20% less than the Lexus models.
Still, chances are not lost for Lexus in Japan. After all Toyota has 45% of the car market here, it booked many prime-time TV ads and the dealership is increasing since 2006. It will still take a while to build a brand image capable to compete Mercedes, BMW or Audi but they also took many years to establish their foreign brands in Japan too.