Japan Market Lexus Sales Surpass BMW and Mercedes

[GM lover]

http://www.businessweek.com/autos/au...day_toyot.html

I mentioned that Lexus outsold Mercedes and BMW in Japan in the "Cadillac needs a global look" forum and mgescuro asked if I had a link and I do.

I do not fully get why Lexus has overtaken Mercedes and BMW maybe because there vehicles are cheaper than their German rivals. In some cases Cadillacs are cheaper than BMW and Mercedes when optioned the same. So why has'nt Cadillac been able to overtake Mercedes and BMW?

Cadillac CTS 2.8 $44,367.93
BMW 325i $47,955.45
Mercedes C 250 Elegance $50,036.73
Lexus IS Version L $38,994.99

[mgescuro]

OK. I have an explanation for this, I think.

2005, Lexus barely makes half its target sales goal, primarily because its cars are rebadges of Toyotas that have existed in the Japanese marketplace for quite some time. Therefore, there was a deep concern amongst the status conscious, luxury buying Japanese that Lexus simply wasn't up to par.

By the tail-end of 2005 and 2006, Toyota had discontinued the Toyota counterparts, and all that existed was Lexus in the Japanese market.
So, if you really really really wanted a Soarer or a Windom or something to replace your Aristo or Celsior.... you really had no choice but to buy the Lexus.

I don't think there is anything to worry about, just yet. I want to see how the Germans respond.

Anyone familiar with the Japanese market here and can attest to the image and status of Lexus versus the Germans.

On a side note... Cadillac's not even ready for this market...

[xioix]

When Lexus launched in Japan, there was only 3 cars, the new GS, and IS, with the rebadged SC formerly the Soarer, although after it was rebadged, its sales were actually higher

Japan doesn't sell the Windom or the ES

Lexus sales soared when the new LS was launched, and now Lexus consist of 4 cars, the IS, GS, LS and SC

[AMERICA 123]

Its almost exclusively about the Yen vs. the Euro , and has very little to do with the product itself .

In Japan , as elsewhere in most of the world , the artificially low value of the Yen is absolutely killing the Europeans vs the Japanese .

This article is dated 18May07 so we should also consider whats happened since then .

[sigma]

Cadillac would have a lot of trouble competing in Japan simply because of the entry barriers the government there has put up with regards to American automobiles. Importing a basic 300C would run you almost 70k if memory serves because of "taxes" which purchasers of local makes get to rebate (dumbed down explanation of how the system works).

[mgescuro]

Originally Posted by xioix

When Lexus launched in Japan, there was only 3 cars, the new GS, and IS, with the rebadged SC formerly the Soarer, although after it was rebadged, its sales were actually higher

Japan doesn't sell the Windom or the ES

Lexus sales soared when the new LS was launched, and now Lexus consist of 4 cars, the IS, GS, LS and SC

And Harrier hasn't been converted to Lexus either. It will get there eventually.

For some reason I thought ES was sold in Japan after Windom was discontinued. WEird.

I still think this is a fluke. I want to see the Germans' response.

[AMERICA 123]

So true . Its amazing they are still allowed an all but completely protected home market .

Hopefully , GM will be able to stab them in the heart with if nothing else , a Chinese sourced Buick or dual sourced Cadillac two mode .

[mgescuro]

Originally Posted by sigma

Cadillac would have a lot of trouble competing in Japan simply because of the entry barriers the government there has put up with regards to American automobiles. Importing a basic 300C would run you almost 70k if memory serves because of "taxes" which purchasers of local makes get to rebate (dumbed down explanation of how the system works).

Oh entry barrier my ass.
The barriers certainly haven't deterred Mercedes or BMW right?
Cadillac would have a lot of trouble competing in Japan if there were no barriers to entry simply because their cars are out classed and imageless in Japan except for a tiny few who think American cars have a "quaint" history.

The only way to stop Lexus is to knock their block off in their home market, where they believe they are "protected." Americans could care less about it, so it's up to the Germans to do it.

I want to see how the Germans respond to their decline in sales, or if they just sit there arrogantly as Cadillac did in the 80's.

With Lexus making significant inroads globally, they will continue their march against the Germans in all market sectors. They cannot rest on their "heritage" forever.

[mbukukanyau]

All foreign automakers have 1 problem in Japan. Distribution. The japanese make sure you have a difficult time selling.
Think Chevy Vs. Saab situation in the US

[Xenon]

Originally Posted by AMERICA 123

Its almost exclusively about the Yen vs. the Euro , and has very little to do with the product itself .

In Japan , as elsewhere in most of the world , the artificially low value of the Yen is absolutely killing the Europeans vs the Japanese .

This article is dated 18May07 so we should also consider whats happened since then .

Thats a pretty stupid argument. If ;anything, the dollar is pretty weak at this point, and they have the home market advantage there. Most people will buy domestic unless they are complete garbage.

[sigma]

Originally Posted by mgescuro

Oh entry barrier my ass.
The barriers certainly haven't deterred Mercedes or BMW right?
Cadillac would have a lot of trouble competing in Japan if there were no barriers to entry simply because their cars are out classed and imageless in Japan except for a tiny few who think American cars have a "quaint" history.

The only way to stop Lexus is to knock their block off in their home market, where they believe they are "protected." Americans could care less about it, so it's up to the Germans to do it.

I want to see how the Germans respond to their decline in sales, or if they just sit there arrogantly as Cadillac did in the 80's.

With Lexus making significant inroads globally, they will continue their march against the Germans in all market sectors. They cannot rest on their "heritage" forever.

There are barriers of entry. Anyone remember how we couldn't sell American skis in Japan because Japan has a different kind of snow?

[mgescuro]

Originally Posted by GM lover

So why has'nt Cadillac been able to overtake Mercedes and BMW?

Cadillac CTS 2.8 $44,367.93
BMW 325i $47,955.45
Mercedes C 250 Elegance $50,036.73
Lexus IS Version L $38,994.99

I guess you're relatively new to GMI, and haven't experienced my patented "Cadillac Rants" yet.

I'll spare you the pain and truncate it.

Cadillac will never overtake Mercedes and BMW because they do NOT have certain intangibles that Mercedes and BMW have.
1) Image and perception
2) Perceived better quality and build techniques
3) Better dealership with a luxury experience.

Chances are, if Cadillac puts on a "ride and drive" event to showcase their new cars, they'll throw a barbecue with potato salad and cole slaw. WHereas when Lexus throws a "ride and drive" even, they throw a soiree with cheese platters, petite amuse buche, wine, waiter service, etc.

When you go to a Lexus dealership, it's luxurious and has well dressed salespeople with a nicely appointed sales floor, thick carpeting or marble and leather couches and seats.
When you go to a Cadillac dealership, there's typical dealership tile, non-descript chairs, so-so dressed sales people in a windbreaker, and an Aveo or H3 parked next to an XLR.

Cadillac hasn't worked on its image.
Cadillac hasn't polished its prestige level.
Cadillac hasn't marketed its cars as classy vehicles.
Cadillac hasn't identified a core market for its cars.
Cadillac hasn't determined how to sell its cars (simply renaming SRX... SRX Crossover doesn't cut it).
Cadillac has inconsistent and arguably unluxurious interiors with inconsistent materials choices in all but the new CTS.
Cadillac continues to foist rebadge cars into markets -- Escalade, BLS, DTS.
Cadillac has an inconsistent dealership experience.
And now Cadillac's entire global lineup is in flux and will be for the forseeable future, as it realigns its cars to fit the "global standard." Why that wasn't done Day 1 is beyond me.

Wanna know why Cadillac's not going to surpass Mercedes or BMW or Lexus anytime soon?? It's all the above.

Cadillac has exactly 1 car that is unquestionably competitive -- the new CTS. That's simply not enough. BUT there is one glaring problem with CTS -- it doesn't know what it's competing against.
It's priced to compete with the 3 series... but sized identically to the 5 series. It'll never perform like a 3 because it's too big. It'll never out-tech or out-luxury the 5 because it's priced low.
What CTS is set to do is pull in buyers who have enough money for a 3 but might want something a bit more, but don't have enough to move to the 5. They're the "low hanging fruit." And that's no way to build prestige and image. You want the "low hanging fruit" to come to you. They need to earn the privilege owning an Cadillac. Cadillac should not be luring them.

Frankly, BLS needs to be accelerated, and it needs to be significantly distinguished from whatever other car GM decides to drop onto the ALpha platform.
Cadillac needs to trash plans to launch a car on the Theta platform to replace SRX and retarget that car for Alpha.

Cadillac doesn't know if its coming or going. ANd honestly, I don't either. It's disappointing seeing Cadillac start off strong 2000-2003... and then fall flat on its face... and pull back from its ambitious plans.

I'm convinced GM is clueless as to how to run a prestige brand properly in the 21st century.

But if Cadillac manages to nail everything down in 5-6 years (ugh... too long to wait), the Cadillac will have a solid shot at challenging Lexus, Mercedes, or BMW.
Cadillac needs perfect execution from now till 2012 or so. Perfect products, matching or exceeding CTS in execution. Continual dealership and product improvements. Etc. It's the only way to make up for lost time.

[GM-Joe]

Originally Posted by mgescuro

OK. I have an explanation for this, I think.

2005, Lexus barely makes half its target sales goal, primarily because its cars are rebadges of Toyotas that have existed in the Japanese marketplace for quite some time. Therefore, there was a deep concern amongst the status conscious, luxury buying Japanese that Lexus simply wasn't up to par.

By the tail-end of 2005 and 2006, Toyota had discontinued the Toyota counterparts, and all that existed was Lexus in the Japanese market.
So, if you really really really wanted a Soarer or a Windom or something to replace your Aristo or Celsior.... you really had no choice but to buy the Lexus.

I don't think there is anything to worry about, just yet. I want to see how the Germans respond.

Anyone familiar with the Japanese market here and can attest to the image and status of Lexus versus the Germans.

On a side note... Cadillac's not even ready for this market...

Well said.



No imports are going to sell very well because of the protectionism and weak yen, unless you have a very strong and famous name, such as Merc or BMV. I would think H2's, H3's, Wranglers, Vettes, and Mustang's would sell, but not if the customer has to pay a 50% premium.

I read, maybe a year ago or so, that GM was happy with their Japanese operations because it always brings in a profit, though little sales. If they tried to sell Chevy Impalas and Cobalts their, there would be little if any profit margin and would be against hostile competition. So if they are happy, I am happy. Too bad that Japan has such a riduculous trade imbalance with the U.S., but China will show up on the shores of the majestic land eventually and give them a taste of their own medicine.

[mgescuro]

Originally Posted by sigma

There are barriers of entry. Anyone remember how we couldn't sell American skis in Japan because Japan has a different kind of snow?

What happened to your reading comprehension?
Of course there are barriers to entry in Japan!! But that HAS NOT stopped Mercedes or BMW from dominating that market for years!!

The question remains as to what BMW and Mercedes will do, now that Lexus has passed them up?

Are they going to roll over?
Are they going to re-double their efforts?
Are they going to outmarket Lexus in Japan?
If the Barriers are hindering Merc/BMW sales, will they find a way around it -- build a factory in Japan.

American arrogance over their own products and a failure to adapt have led to an embarrassing collapse of American products internationally. But the Germans are not like that.
They will (or should) adapt and challenge Lexus in Japan.

Never heard of American skis in Japan because of different snow. The answer is to simply modify American skis to "better suit Japanese snow." Then back it with a marketing campaign that emphasizes the strength of said American brand and its history... and then purposely price it high because you have built a perception that it is in fact a "better" product. 2nd strategy is to find a Japanese manufacturer of skis to build the darn things for you. 3rd strategy is to license japanese skis, slap your name on it to build a name in Japan... and then proceed with the 1st strategy, resulting in a tiered product structure.

[AMERICA 123]

Originally Posted by Xenon

Thats a pretty stupid argument. If ;anything, the dollar is pretty weak at this point, and they have the home market advantage there.

Hmmm I think you might be in the wrong thread - dollar has nothing to do with it .

Most people will buy domestic unless they are complete garbage.

Yes , that is why BMW , MB and Porsche have had years of such surprising success in Japan .